- Natural Market Extension into
Attractive Vermont Market with a High-Quality, Low Risk
Partner
- Financially Attractive Transaction
with Significant Premium to MBVT Shareholders and Strong Earnings
Accretion to CBU Shareholders
- Transaction Fully Absorbs Cost of
Crossing $10 Billion
Community Bank System, Inc. (“Community Bank System”) (NYSE:
CBU) and Merchants Bancshares, Inc. (“Merchants Bancshares”)
(NASDAQ: MBVT) today announced that they have entered into a
definitive agreement under which Community Bank System will acquire
Merchants Bancshares, parent company of Merchants Bank in a cash
and stock transaction for total consideration valued at
approximately $304 million. The transaction has been unanimously
approved by the boards of directors of both companies.
This Smart News Release features multimedia.
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Merchants Bancshares is the largest statewide independent bank
in Vermont, with total assets of nearly $1.9 billion, deposits of
$1.5 billion and 32 banking offices. Additionally, Merchants is the
third largest institution by deposit market share in Vermont, with
a growing presence in Western Massachusetts. The combination will
provide natural market extension for both institutions, joining two
high-quality, low-risk franchises with long histories of service to
their customers and communities.
Under the terms of the agreement, shareholders of Merchants
Bancshares will have the option to receive, at their election,
consideration per share equal to (i) 0.963 shares of Community Bank
System common stock, (ii) $40.00 in cash or (iii) the combination
of 0.6741 shares of Community Bank System common stock and $12.00
in cash, subject to an overall proration to 70% stock and 30% cash.
The cash and stock consideration would be equivalent to $44.02 for
each share of Merchants Bancshares common stock based upon the
closing price of Community Bank System common stock as of October
21, 2016. The transaction is intended to qualify as a
reorganization for federal income tax purposes, and as a result,
the receipt of Community Bank System common stock by shareholders
of Merchants Bancshares is expected to be tax-free.
“We are very excited to be partnering with Merchants Bank,
extending our footprint into the attractive Vermont and Western
Massachusetts markets,” said Community Bank System President &
Chief Executive Officer Mark E. Tryniski. “Merchants Bank has an
impressive history of service to its customers, its communities and
its shareholders. More importantly, the organizational values of
Merchants Bank, and its people, align very well with those of
Community Bank. We are delighted to welcome the Merchants team to
the Community Bank organization and look forward to the future of
the combined company. We are also pleased that Geoffrey Hesslink,
President & Chief Executive Officer of Merchants Bank, will
become the New England Regional President of our combined
organization.”
Geoffrey R. Hesslink, President and Chief Executive Officer of
Merchants Bancshares commented, “We are proud to become part of a
long standing, solid and complementary franchise like Community
Bank. We will continue to provide our highly personalized
experience to our customers, while providing them with an expanded
set of products and services as a larger organization. We look
forward to working closely with Community Bank System to complete
the combination.”
Upon completion of the transaction, the combined company will
fully absorb the cost of crossing $10 billion in assets, while
providing earnings accretion for Community Bank System
shareholders. Community Bank System expects the transaction to be
approximately $0.10 per share accretive to 2018 GAAP earnings
($0.17 excluding the impact of crossing $10 billion in assets) and
$0.15 per share accretive to 2018 cash earnings ($0.22 excluding
the impact of crossing $10 billion in assets). Community Bank
System intends to donate $500,000 to the Merchants Bank Foundation
following the completion of the merger to further strengthen the
support of the communities Merchants serves.
The merger agreement provides for two directors from Merchants
Bancshares to be added to the Board of Directors of Community Bank
System. The merger is expected to close in the second quarter of
2017 and is subject to customary closing conditions, including
approval by the shareholders of Merchants Bancshares and required
regulatory approvals.
RBC Capital Markets, LLC acted as exclusive financial advisor to
Community Bank System and Cadwalader, Wickersham & Taft LLP
acted as its legal advisor. Piper Jaffray & Co. acted as
exclusive financial advisor to Merchants Bancshares and Goodwin
Procter LLP acted as its legal advisor.
Community Bank System will host a conference call at 11 am (ET)
on Tuesday, October 25, 2016 to discuss its third quarter 2016
financial results and the combination with Merchants Bancshares.
The conference call can be accessed at 888-503-8171 using the
conference ID code 5675553. Investors may also listen live via the
Internet at: http://www.webcaster4.com/Webcast/Page/995/17761.
About Community Bank System, Inc.
Community Bank System, Inc. operates more than 200 customer
facilities across Upstate New York and Northeastern Pennsylvania
through its banking subsidiary, Community Bank, N.A. With assets of
approximately $8.7 billion, the DeWitt, N.Y. headquartered company
is among the country's 150 largest financial institutions. In
addition to a full range of retail and business banking services,
the Company offers comprehensive financial planning, insurance and
wealth management services through its’ Community Bank Wealth
Management Group and OneGroup NY, Inc. operating subsidiaries. The
Company's Benefit Plans Administrative Services, Inc. subsidiary is
a leading provider of employee benefits administration, trust
services, and actuarial and consulting services to customers on a
national scale. Community Bank System, Inc. is listed on the New
York Stock Exchange and the Company's stock trades under the symbol
CBU. For more information about Community Bank visit
www.communitybankna.com or http://ir.communitybanksystem.com.
About Merchants Bancshares, Inc.
Merchants Bancshares, Inc. reported total assets at June 30,
2016 of approximately $1.9 billion. Merchants Bancshares, Inc. is
the holding company for Merchants Bank. The bank's business,
municipal, consumer, and investment customers enjoy personalized
relationships, sophisticated online and mobile banking options,
with 31 branches in Vermont and 1 location in Massachusetts,
operating as NUVO, a division of Merchants Bank. Merchants
Bancshares, Inc. is listed on the NASDAQ Stock Market and trades
under the symbol MBVT. For more information about Merchants Bank
visit www.mbvt.com.
Additional Information about the Merger
In connection with the proposed merger, Community Bank System,
Inc. will file with the Securities and Exchange Commission (SEC) a
Registration Statement on Form S-4 that will include a prospectus
of Community Bank System, Inc. and a proxy statement of Merchants
Bancshares, Inc., as well as other relevant documents concerning
the proposed transaction. This communication does not constitute an
offer to sell or the solicitation of an offer to buy any securities
or a solicitation of any vote or approval. Stockholders of
Merchants Bancshares, Inc. are urged to read the registration
statement and proxy statement/prospectus and the other relevant
materials filed with the SEC when they become available because
they will contain important information about the proposed
transaction.
A free copy of the proxy statement/prospectus, when available,
as well as other filings containing information about Merchants
Bancshares, Inc. and Community Bank System, Inc., may be obtained
at the SEC’s Internet site (http://www.sec.gov). You will also be
able to obtain these documents, when available, free of charge from
Merchants Bancshares, Inc. at http://www.mbvt.com/ under the
heading “Investor Relations” and then “SEC Filings” or from
Community Bank System, Inc. by accessing its website at
www.communitybankna.com under the heading of “Investor Relations”
and then “SEC Filings & Annual Report.” Copies of the proxy
statement/prospectus can also be obtained, free of charge and when
available, by directing a request to Merchants Bancshares, Inc.,
P.O. Box 1009, Burlington, Vermont 05402, Attention: Investor
Relations, Telephone: (900) 322-5222 or to Community Bank System,
Inc., 5790 Widewaters Parkway, DeWitt, New York 13214, Attention:
Investor Relations, Telephone: (315) 445-2282.
Merchants Bancshares, Inc. and Community Bank System, Inc. and
certain of their respective directors and executive officers may be
deemed to participate in the solicitation of proxies from the
stockholders of Merchants Bancshares, Inc. in connection with the
proposed merger. Information about the directors and executive
officers of Merchants Bancshares, Inc. and their ownership of
Merchants Bancshares, Inc. common stock is set forth in the proxy
statement for its 2016 annual meeting of stockholders, as filed
with the SEC on Schedule 14A on April 15, 2016. Information about
the directors and executive officers of Community Bank System, Inc.
and their ownership of Community Bank System, Inc. common stock is
set forth in the proxy statement for its 2016 annual meeting of
shareholders, as filed with the SEC on Schedule 14A on April 1,
2016. Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the proxy
statement/prospectus regarding the proposed merger when it becomes
available. Free copies of this document when available may be
obtained as described in the preceding paragraph.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by the use of
the words “will,” “anticipate,” “expect,” “intend,” “estimate,”
“target,” and words of similar import. Forward-looking statements
are not historical facts but instead express only management’s
beliefs regarding future results or events, many of which, by their
nature, are inherently uncertain and outside of management’s
control. The following factors, among others listed in the
Companies’ Form 10-K filings, could cause the actual results of the
Companies’ operations to differ materially from the Companies’
expectations: failure to obtain the approval of the shareholders of
Merchants Bancshares in connection with the merger; the timing to
consummate the proposed merger; the risk that a condition to
closing of the proposed merger may not be satisfied; the risk that
a regulatory approval that may be required for the proposed merger
is not obtained or is obtained subject to conditions that are not
anticipated; the parties’ ability to achieve the synergies and
value creation contemplated by the proposed merger; the parties’
ability to successfully integrate operations in the proposed
merger; the effect of the announcement of the proposed merger on
the ability of Merchants Bancshares to maintain relationships with
its key partners, customers and employees, and on its operating
results and business generally; competition; changes in economic
conditions, interest rates and financial markets; and changes in
legislation or regulatory requirements. The Companies do not assume
any duty to update forward-looking statements.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161024005357/en/
Community Bank System, Inc.Scott A. Kingsley, 315-445-3121E.V.P.
and Chief Financial OfficerorMerchants Bancshares, Inc.Geoffrey R.
Hesslink, 802-865-1603President and Chief Executive Officer
Merchants Bancshares, Inc. (NASDAQ:MBVT)
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