Bancorp South completed its merger with Cadence Bancorp on 10/29/2021 for Bancorp South shares. Bancorp South then changed its name to Cadence Bank and the ticker symbol of its shares to CADE, the symbol used by Cadence Bancorp before the merger. Just before the merger Cadence Bancorp paid a special dividend of $1.25 per share.
Treat this as a merger of BXS into CADE. Here are the details for this merger.
Save the transaction and the merger has been entered.
The companies plan to structure the merger so it is a non-taxable event. We will assume they are successful. This merger is complicated by the facts that the surviving company will use the ticker symbol of the non-surviving company and the dividend paid by Cadence Bancorp before the merger may be interpreted by the IRS as part of the merger consideration. The information below is based on the information available from filings with the SEC. Price information is from websites offering historical prices.
NOTE: The companies state they will endeavor to satisfy the conditions necessary to make this transaction non-taxable and that the dividend paid by Cadence Bancorp before the merger will NOT be part of the merger consideration. However, they also state there is the possibility the IRS will disagree with their characterization of the merger and dividend. These instructions assume the companies succeed in their efforts. New instructions will be written, if and when it becomes known the merger should be treated as a taxable event or the dividend must be treated as part of the merger consideration.
The myICLUB accounting software uses ticker symbols to identify companies. With the surviving company using the ticker symbol of the non-surviving company this allows for this transaction to be entered in 2 different ways and meet the tax consequences of the merger. Both methods will be described. Users can choose the method depending on how they wish Valuation Statement return figures will be calculated.
Ideas for deciding which method to use.
Method 1 – Use this method if you believe the combined company is similar enough to Cadence Bancorp that tracking the returns from the first Cadence Bancorp purchase makes sense. Or, you are indifferent to the return tracking and just want the easiest method to complete this merger.
Method 2 – Use this method if you believe the combined company is different enough to track its performance starting on the merger date. This includes believing that management has changed significantly enough to warrant tracking performance starting with the date of the merger.
Regardless of which method you choose, Cadence Bancorp shareholders should first enter the special dividend received. Here is the information for the dividend entry.
After this is entered, proceed with the merger transaction. Choose only one merger method.
Merger Method 1 - The first method for Cadence Bancorp shareholders is to treat this as a reverse stock split. Using this method, the return calculation for new Cadence Bank will begin with the first purchase of Cadence Bancorp. Here is the information needed to complete the merger using this method. If you use this method, you do not need to make any further entries.
Use the Stock Split transaction.
To update the name of the security
The transaction is complete.
Merger Method 2 - The second method for Cadence Bancorp shareholders is to treat this as two mergers. The extra merger transaction is to prevent ticker symbol confusion. (The software does not allow the merger of 2 companies with the same ticker symbol.) Using this method, the return calculation for new CADE will begin on the final merger date, as if new Cadence Bank (old Bancorp South) was purchased on that date. Here is the information needed to complete the merger using this method.
The First Merger Entry for Method 2
Go to Transactions > Merger or Accounting > Securities > Record merger of securities depending on the version of the software being used. If you are unfamiliar with merger transactions you can get help at this URL: http://www.iclub.com/support/kb/default.asp?page=normal_merger
Here is the information needed for Cadence Bancorp shareholders to complete the first of the 2 mergers for this method. For myICLUB users, if a different name appears when the ticker symbol BXS is entered, do not worry, just continue. At this point the BSX symbol is a place holder.
Save the transaction and the first merger has been entered.
Here is the information needed for Cadence Bancorp shareholders to complete the merger with Bancorp South. Remember, using the old ticker of Bancorp South is just a way to avoid merging two companies with the same ticker symbol. It is a convenient substitute for (new) Cadence Bank but a different symbol.
The Second Merger Entry for Method 2
Save the transaction and the merger has been completed.
NOTE for Cadence Bancorp shareholders:
If the IRS rules the dividend paid by Cadence Bancorp before the merger was part of the merger consideration, any entries made for this merger, including the dividend, will need to be deleted. The merger will then need to be entered using the Merger with cash transaction. New instructions will be written and made available, if this change is needed, when ICLUBcentral becomes aware of this change in merger status.