Gunther Family Trust members and other longer-term shareholders were the true winners of the emerging proxy fight, as some more than doubled their share valuations in roughly 11 months.

With the ante rising in the high stakes poker game known as Altabancorp vs. the Gunther Family Trust proxy battle, it appears that the shareholders have won, both in principle and in principal, as Altabancorp announced late yesterday it has agreed to be purchased by Glacier Bancorp for over $930 million.

Here’s the background it’s unlikely you’re gonna get from any other Utah-based media outlet, including the fact that the protagonists in this battle doubled the value of their holdings in just over 11 months.


The Gunther Family vs. Altabancorp

As first reported here in “A Battle for the Soul of Altabancorp” on January 28, 2021, I revealed what I felt was a fascinating tale of the nearly 70-year ties of the Orville Gunther family to the now-named Altabancorp (NasdaqGS:ALTA).

In fact, with the involvement of Orville (initially as a Board Member and eventually as President), the collective Gunther family eventually became the largest shareholders of the then named Bank of American Fork in 1971.

Orville’s eldest son, Dale, joined the bank’s Board of Directors that same year, a role he filled for 49 years. And during those nearly five decades with the bank, Dale served in such positions as Vice President, President and Chairman (until his retirement in 2005).

As I reported in that January 28 story,

“… four generations of the Gunther family have had varying roles with the now-named Altabancorp, ranging from shareholders to senior executive positions, and up to Chairman of the Board.”

As outlined in that same issue of Deseret Business Watch, a lot had happened to the financial institution that got its start as “… a hometown bank serving sheep farmers, including

  1. “A 2013 merger with Lewiston Bancorp (the bank holding company for Lewiston State Bank);
  2. “An Initial Public Offering in 2015 for the parent company on the NASDAQ Stock Exchange, an IPO that raised $36 million and valued then-named People’s Utah Bancorp at $256MM. {NOTE: This IPO lowered the Gunther family’s ownership position in the bank to approximately 33%.};
  3. “The 2017 acquisition of seven Utah-based branches of Banner Bank;
  4. “The 2017 acquisition of Town & Country Bank in St. George; and
  5. “The 2019/2020 rebranding of People’s Utah Bancorp as Altabank, with all bank branches being renamed Altabank, and the change of the NASDAQ stock symbol to ‘ALTA.’”

So what actually happened to transform what had been a decades-long, mutually supportive and financially beneficial relationship into one of tone-deafness and perhaps, even, disdain?

I suspect that in this instance, like many familial breakups, it all boiled down to a challenge of one party not listening to the other.


The Path from Indifference to Acrimony

As I’ve watched the dissolution of what were once loving and supporting marriages into indifference and acrimony, one of the common themes is often when one party feels she/he is better or smarter than the other. And this appears to have been one of the undercurrents of the falling out between Altabancorp and its largest group of shareholders: The Gunther Family Trust.

By the time the collective members of the Gunther family banded together to

  1. Form a family trust as a legal entity, and then
  2. Filed a Schedule 13D with the U.S. Securities and Exchange Commission (SEC) on June 10, 2020 because the group controlled more than 5% of the outstanding shares of Altabancorp,

it was clear that things had disintegrated to a place where there was a clearly a “failure to communicate” (as made famous/infamous in the movie, Cool Hand Luke).

Excerpt from the movie "Cool Hand Luke" found on YouTube.

In shorthand, the back and forth between the Gunther Family Trust and the leadership of Altabancorp went something like this:

  • You’re not running the bank the way we ran it when we were in charge, the Gunther’s would say.
  • We think we’re running the bank just fine, would come the reply.
  • Well, we’d like to meet with the bank’s Board of Directors to explain what things we think can be done better than they’re being done now.
  • No, we don’t think that’s necessary. How ‘bout if you meet with this special committee instead?
  • No, you’re just giving us the runaround. Don’t you realize that we control nearly 1/3 of all the shares of Altabancorp?
  • Yes, but aren’t we doing a great job running the bank? Look at all these great results we’re producing.

And it went on and on and on, until (eventually), the Gunther shareholders felt they had no recourse than to make their displeasure and disagreements with the leadership and Board of Altabancorp a matter of public record. And so they did.

{NOTE: To get the initial blow-by-blow background of this story, I strongly urge you to check out A Battle for the Soul of Altabancorp.” It will probably take six-to-eight minutes to read, but I think it’s quite revealing, at least if I do say so myself.”


From Proxy Battle Beginnings to Agreeing to Sell

By the time March 15th rolled around, any chance that the Gunther Family Trust and Altabancorp leadership would solve their differences amicably were dashed when the 13D shareholders formally filed a notice with the SEC urging other ALTA shareholders to “Vote No” and withhold their votes for certain Altabancorp Board Members up for reelection.

{Remember: The Gunther Family Trust collectively held 31% of all outstanding Altabancorp shares at this time, giving them a strong voting bloc for the then forthcoming annual meeting.}

Additionally, its 13D filing with the SEC further revealed that as a family trust the Gunther’s had hired MacKenzie Partners, a New York law firm that specializes in “proxy fights,” which (as I wrote in the March 19 issue of Deseret Business Watch) was not surprising given the way things had evolved/devolved.

Now, just two months after the Gunther Family Trust called the bluff of Altabancorp leadership by effectively saying “We’re willing to go to war,” ALTA has folded, ceding victory to the Gunthers and agreeing to be subsumed by a larger, regional bank, Glacier (NasdaqGS:GBCI).

The Altabancorp news release and the Glacier news release are virtually identical, with key points including

  • The boards of both banks, and of certain Gunther family members (probably Dale, among any others, as he is one with signatory rights for the entire Gunther Family Trust) have approved the acquisition of Altabancorp;
  • The acquisition needs be reviewed and approved by the proper regulatory bodies, which should not be a problem, and is expected to close in the fourth quarter of this year;
  • At closing, ALTA shareholders will receive 0.7971 shares of Glacier for each share of Altabancorp stock they hold; and
  • Given the closing price of $61.51 for Glacier shares on May 17, this places the buyout price of Altabancorp at $933.5 million.

Determining the premium acquisition price for Altabancorp shareholders is a bit tricky, but not hard.

So … because the acquisition price ties back to the close of Wall Street on Monday, May 17, that’s the date/time we need to use as well.

On May 17, Altabancorp stock closed at $41.64/share. And with 18.87 million total shares outstanding of ALTA stock, that gave Altabancorp a valuation of close to $785.75 million on Monday.

And $933.5 million minus $785.75 million means a difference of $147.75 million or a premium of 18.8% above the price of ALTA shares at the close of the stock market on Monday.

Broken down to a per share basis, Altabancorp shares will be worth $49.47 when the acquisition is finalized. And as of 8am MT this morning, ALTA stock is at $45.70/share, up 7.35% since yesterday’s closing price. Not bad.


Remember — Kenny Rodgers was Right

Without question, The Gambler is Kenny Rodgers’ most popular and successful song.

Music video for Kenny Rodgers' song, "The Gambler" (as found on YouTube.

And when I think of the chorus where Kenny sings,

“You got to know when to hold ‘em,

“Know when to fold ‘em,

“Know when to walk away,

“Know when to run ...”

I think of Dale Gunther, son of Orville and Altabancorp’s former Board Member, President and Vice Chairman.

And I also think the “city slickers” running Altabancorp and on its board had no idea who was sitting across the table from them in this figurative game of cards for the Soul of Altabancorp.

But make no mistake about it, Dale knew. Oh yes, he knew.

Chart highlighting the closing price of Altabancorp shares on June 10, 2020. Chart courtesy of Yahoo!Finance, downloaded 18 May 2021.

As shown in the chart above, June 10, 2020 was the day the leadership of the Gunther Family TrustDale and his brother, Blaine C. — filed their initial Schedule 13D with the SEC.

And on that day, shares in Altabancorp closed at $23.42/share.

Now (as noted above) all of the members of Gunther Family Trust and any investors who held ALTA stock on that day and opt to sell to Glacier when the transaction closes, will see an increase of at least 111% … in just over 11 months!

Yes, they’ll need to wait until the deal closes in Q4 to get the full amount. And such a buyout doesn’t include any fees for such a trade or capital gains taxes.

But I suspect we’ll see the trading price of Altabancorp shares get over $26.84 between now and then.

Besides, who doesn’t like a Return on Investment of more than 100% — in less than a year?!?!


Closing Thoughts

Lest you think Glacier is doing Altabancorp leadership or shareholders “a solid” just because it’s led by a bunch of nice people, you should know that Glacier expects this deal to be accretive.

In plain English, that means that Altabancorp’s revenue and profits will be immediately added to Glacier’s bottom line, effectively increasing its earnings per share right away.

Additionally, although I firmly believe that Dale Gunther and the other members of the Gunther Family Trust are the clear winners of this transaction, make no mistake about it:

The likelihood that Altabancorp’s leadership and Board Members will NOT also claim victory in this deal is essentially zero. In other words, the Glacier acquisition of Altabancorp will be positioned as a victory for and by them too.

And in this day and age of 8th Place Trophies, I guess that doesn’t surprise me either.

But then again, I suspect we all know who actually “won this hand.”


NOTE:  This article was originally published by Deseret Business Watch. A few minor editorial changes have been made with this version to better match the current Silicon Slopes writing style.

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