Stellar Bancorp, Inc. 8-K

What Happened
Stellar Bancorp, Inc. (Stellar) and Prosperity Bancshares, Inc. (Prosperity) announced on January 27, 2026 that they entered into a definitive Agreement and Plan of Merger under which Stellar will merge into Prosperity and Stellar Bank will merge into Prosperity Bank. The deal was unanimously approved by both companies’ boards. At closing, each outstanding share of Stellar common stock (except certain excluded shares) will be converted into 0.3803 shares of Prosperity common stock plus $11.36 in cash per Stellar share. The merger also includes board composition changes (two Stellar-designated directors to be added to each of Prosperity’s boards) and is subject to customary conditions, including Stellar shareholder approval, regulatory approvals, effectiveness of a Form S-4 registration statement, and NYSE listing authorization.

Key Details

• Date of Merger Agreement: January 27, 2026.
• Per-share consideration: 0.3803 Prosperity shares + $11.36 cash. Fractional shares paid in cash.
• Per Share Merger Consideration Value = $11.36 cash + (0.3803 × 10-day average closing price of Prosperity ending 5 trading days before closing).
• Treatment of Stellar equity awards: in-the-money stock options convert to a cash payment equal to the spread vs. the Per Share Merger Consideration Value; options at-or-above that value are cancelled for no consideration; service-based restricted stock vests and converts to the Per Share Merger Consideration; performance units convert to a cash payment (assumed at 100% of target, 200% for 2024 grants).
• Termination fee: Stellar may owe a $78 million termination fee to Prosperity in certain termination scenarios.
• Support/voting: Stellar’s directors (collectively controlling ~8.8% of Stellar shares) entered voting agreements to support the merger and director support agreements imposing confidentiality and non-solicit restrictions for two years.

Why It Matters
For Stellar shareholders, the deal offers a fixed cash component plus Prosperity stock—meaning proceeds depend partly on Prosperity’s share price at closing (via the stated average). Shareholders must vote to approve the transaction and regulatory approvals are required, so the merger is not final until those conditions are met. The $78 million termination fee and director voting/support agreements reduce the likelihood of competing bids. The treatment of equity awards is material to Stellar employees and option holders: some options will yield cash payments, while others may be cancelled without value. Prosperity will file a Form S‑4 (proxy/prospectus) that will provide full deal details and required disclosures for investors.