CapitalSource announced the completion of term financing of commercial real estate loans worth $1.07 billion from the company’s portfolio. Lehman Brothers maintained its ‘overweight’ rating for CapitalSource, but reduced its EPS estimates for 2007 and 2008 from $2.70 to $2.65 and from $2.98 to $2.95, respectively. This was due to the higher funding costs and slightly slower growth.
CapitalSource Inc. and TierOne Corporation announced a definitive agreement under which the Company will acquire TierOne Corporation, the holding company of TierOne Bank, in a stock and cash transaction valued at approximately $652 million, or approximately $34.46 for each TierOne Corporation share. Upon closing of the transaction, TierOne Corporation will become a subsidiary of CapitalSource Inc. Under the terms of the definitive agreement, which has been approved by both companies' Boards of Directors, each TierOne Corporation share will be exchanged for : $6.80 in cash plus 0.675 shares of the Company's common stock plus either if the Company's stock price, based on a 10-day trading period prior to closing, is less than or equal to $25.1852, an additional 0.405 of the Company's shares, or if the Company's stock price, based on a 10- day trading period prior to closing, is greater than $25.1852, at the shareholders' election, either $10.20 in cash or a fraction of the Company's share having a value, based on a 10-day trading period prior to closing, equal to $10.20. Based on the price of the Company's shares at the close of business on May 17, 2007, the transaction is valued at approximately $34.46 per TierOne Corporation share. The transaction is subject to regulatory and TierOne shareholder approvals and is expected to close in the fourth quarter 2007.