The Bank Slate

INSIGHTS INTO THE BANKING INDUSTRY

Valley was one of seven bidders for Westchester Bank

Valley National Bancorp in New York had to raise its offer to strike a deal for Westchester Bank Holding in White Plains, N.Y. 


The $41.3 billion-asset Valley was the largest of seven bidders for the $1.3 billion-asset Westchester, according to a regulatory filing tied to the pending $210 million acquisition. Valley was coaxed to boost its offer by 6.5%, to $3,300 a share, to gain an exclusivity agreement. 

First, the details of the proposed combination, which is expected to close in the fourth quarter. 

The deal is expected to be about 1% accretive to Valley’s earnings and neutral to its tangible book value ratio.

Valley plans to cut about 30% of Westchester’s annual noninterest expenses. The company expects to incur $11 million of merger-related expenses.

Now for the background of the merger.
  • The Westchester board decided during an April 13 meeting to hire an investment bank to evaluate its business plan and review strategic alternatives, including a possible sale.
  • The investment bank, starting on May 5, contacted 16 financial institutions to gauge their interest in an acquisition. Thirteen expressed an interest and 11 executed nondisclosure agreements to gain access to the data room. Each agreed to a May 21 deadline for submitting nonbinding indications of interest.
  • Westchester received seven indications of interest, including one from Valley.
  • Valley, the largest financial institution, proposed an all-stock transaction with a purchase price of $3,100 a share. The highest indication of interest had a value of $3,300 a share.
  • The investment bank contacted Valley on May 21 to see if it would be willing to increase the value of its proposal. Three days later, Valley raised its offer to $3,300 a share, contingent on a 30-day exclusivity period.
  • Westchester’s board voted unanimously on May 24 to authorize management to execute Valley’s indication of interest, which included a 30-day exclusivity period. Westchester then began its due diligence of Valley.
  • The first draft of the merger agreement was circulated on June 17.
  • The Valley board voted unanimously to approve the merger agreement on June 28. The Westchester board unanimously approved the deal the next day and it was announced.
  • John Tolomer, Westchester’s president and CEO, will become a market president for Valley under a two-year employment agreement that can be extended. He will receive a base salary of $550,000 and will be eligible to receive a target annual cash bonus equal to 45% of his base salary.
  • Tolomer will receive a lump sum cash payment of $605,000 for agreeing to restrictive covenants, including two-year noncompete and non-solicitation provisions.

Leave a Reply

Your email address will not be published. Required fields are marked *