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Eagle Bancorp (EBMT) Announces Dutch Auction Tender Offer

·3 min read

Eagle Bancorp Montana, Inc. EBMT announced the commencement of a modified “Dutch auction” tender offer. The company said that it commenced a tender offer to purchase up to $6 million of its common stock in cash.

It will purchase the shares at a price not less than $24.00 per share and not greater than $26.25, less any applicable withholding taxes and without interest.

Unless extended or terminated, the tender offer will likely expire on Jun 22, 2021.

Notably, in a modified “Dutch auction” tender offer, shareholders are allowed to indicate how many shares and at what price within the range described above do they wish to tender their shares. Then, based on the number of shares tendered and the prices quoted by the tendering shareholder, the company decides the lowest per-share price that will enable it to acquire the required number of shares.

All shares that are accepted in the tender offer are purchased at the same price, irrespective of whether they were tendered at a lower price.

In the case of Eagle Bancorp, if the tender offer is subscribed fully, the company will purchase shares between 228,571 and 250,000, or 3.37% and 3.69% of its outstanding common stock.

The directors and executive officers of the company will not tender any of their shares. Notably, any shares tendered can be withdrawn prior to the expiration of the offer.

Also, the tender offer is not contingent upon any minimum number of shares being tendered.

The “Offer to Purchase” and the “Letter of Transmittal” that the company files with the SEC will contain important information about the terms and conditions of the tender offer and these must be followed by shareholders.

Notably, after the expiration of the tender offer, Eagle Bancorp intends to sell to the Opportunity Bank of Montana employee stock ownership plan (“ESOP”) shares with a market value of $6 million. The purchase of shares pursuant to the tender offer will thus offset the dilution in earnings, which would otherwise result from the sale of shares to the ESOP.

Per Eagle Bancorp’s board of directors, a tender offer is an efficient way to provide all shareholders with the opportunity to tender all or a portion of their shares.

Like Eagle Bancorp, Hilltop Holdings Inc. HTH and Washington Federal WAFD commenced modified Dutch auction tender offers to purchase up to $350 million and up to $290 million of their common stock in cash, respectively.

So far this year, shares of Eagle Bancorp have gained 18.9% compared with the industry’s rally of 26.5%.

Currently, the company carries a Zacks Rank #4 (Sell).

A better-ranked stock from the same space is Civista Bancshares, Inc. CIVB. The Zacks Consensus Estimate for its 2021 earnings has been revised 3.3% upward over the past 30 days. Its shares have gained 38.8% in the past six months. Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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