- 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
SYRACUSE, N.Y. & SOUTH BURLINGTON, Vt.--(BUSINESS WIRE)--
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.
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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.
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Community Bank System, Inc.
Scott A. Kingsley, 315-445-3121
E.V.P.
and Chief Financial Officer
or
Merchants Bancshares, Inc.
Geoffrey
R. Hesslink, 802-865-1603
President and Chief Executive Officer
Source: Community Bank System, Inc.