TierOne terminates merger with CapitalSource

By Lisa Kerner

Charlotte, N.C., March 20 - TierOne Corp.'s board of directors has terminated the company's merger agreement with CapitalSource Inc.

Either company could terminate the agreement if the proposed merger was not completed by Feb. 17, according to a TierOne news release.

No termination fee is payable by TierOne as a result of the termination, the release said.

On Feb. 19, TierOne said it remained committed to completing the merger, despite the passing of the Feb. 17 deadline. Shareholders of the Lincoln, Neb., federally chartered savings bank approved the acquisition in November.

As previously reported, both companies were waiting for approval from the Office of Thrift Supervision to close the pending merger transaction.

CapitalSource agreed to acquire TierOne, which is TierOne Bank's holding company, in a stock and cash transaction valued at about $652 million, or $34.46 per share.

Under the agreement, each TierOne share would have been exchanged for $6.80 in cash plus 0.675 of a share of CapitalSource. Stockholders would have received an additional 0.405 of a CapitalSource share if CapitalSource's stock price, based on a 10-day trading period prior to closing, was less than or equal to $25.1852.

On Thursday, TierOne's board also authorized the repurchase of up to 10%, or 1,797,592 shares, of its common stock from time to time "as conditions warrant."

CapitalSource is a commercial lending, investment and asset management business based in Chevy Chase, Md.

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