By Lisa Kerner
Charlotte, N.C., Sept. 3 - First Merchants Corp. said it agreed to acquire Lincoln Bancorp in a move that will create the largest financial holding company based in Indiana.
Estimated value of the transaction is between $74 million and $77 million, a First Merchants news release said.
Under the companies' merger agreement, Lincoln shareholders will have the right to elect to receive 0.7004 shares of First Merchants common stock or approximately $15.76 in cash for each share of Lincoln common stock owned, subject to proration.
No more than 3,576,417 shares of First Merchants common stock and no more than $16.8 million in cash may be paid to the Lincoln shareholders, according to a form 8-K filed with the Securities and Exchange Commission.
A $2 million termination fee is included in the agreement, the filing said.
The merger is slated to close in the fourth quarter of 2008, pending shareholder and regulatory approvals.
First Merchants said its chief banking officer, Michael J. Stewart, will be president of the newly consolidated First Merchants Bank of Central Indiana.
The combined company will have 82 banking offices in 23 Indiana and three Ohio counties, a trust company with assets under management in excess of $1.7 billion and a multi-line insurance agency, according to the release.
"Lincoln's franchise fits well with First Merchants' strategic direction and specifically its presence in Johnson and Hendricks counties, two of Indiana's fastest growing markets," Mike Rechin, First Merchants president and chief executive officer, said in the release.
"We anticipate modest dilution to earnings per share in 2009, with accretive EPS growth in 2010 and beyond, through identified transaction synergies," Rechin said.
Lincoln Bancorp was advised by Sandler O'Neill & Partners, LP, which also provided a fairness opinion to the company's board of directors.
First Merchants is a financial services holding company based in Muncie, Ind. It operates four bank subsidiaries: First Merchants Bank, First Merchants Bank of Central Indiana, Lafayette Bank & Trust Co. and Commerce National Bank in Columbus, Ohio.
Lincoln Bancorp is the holding company for Lincoln Bank, both of which are based in Plainfield, Ind.
| Acquirer: | First Merchants Corp.
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| Target: | Lincoln Bancorp
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| Announcement date: | Sept. 3
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| Transaction total: | $74 million to $77 million
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| Price per share: | $15.76 in cash or 0.7004 First Merchants shares
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| Expected closing: | Fourth quarter of 2008
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| Stock price for acquirer: | Nasdaq: FRME: $19.89 on Sept. 2
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| Stock price for target: | Nasdaq: LNCB: $10.35 on Sept. 2
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