Peoples-Sidney Financial in Sidney, Ohio garnered considerable interest from potential buyers before agreeing to be sold to Farmers & Merchants Bancorp in Archbold, Ohio.
The $2.7 billion-asset F&M agreed in mid-June to buy the $133 million-asset Peoples-Sidney for $27 million.
Peoples-Sidney received 10 nonbinding indications of interest before agreeing to talk with F&M, according to a regulatory filing tied to the pending merger.
Peoples-Sidney hired an investment bank in January to help it find a buyer. The investment bank contacted 30 potential suitors on March 14. Of those, 25 signed a nondisclosure agreement, and 10 submitted offers on April 7.
Peoples-Sidney’s board instructed its investment bank to invite four of the potential candidates, including F&M, to conduct “a more-detailed and comprehensive due diligence process.” F&M conducted its on-site due diligence on April 19-20.
Each suitor submitted revised indications of interest on May 12.
F&M’s offer consisted of 60% stock and valued Peoples-Sidney at $20.49 a share. Two of the other proposals had a value of $23 a share, while the fourth pitch was $20.50 a share – each of those were all-cash offers.
Peoples-Sidney asked its investment bank to inquire if each offer was the final and best proposal. One suitor was asked to remove a clause requiring Peoples-Sidney to have a minimum equity level at closing, and F&M was asked if it would let Peoples-Sidney’s investors elect cash or stock.
The minimum equity level was removed, and F&M gave Peoples-Sidney three options for consideration. One of the other candidates said it would be open to increasing its offer by $300,000.
Peoples-Sidney notified the other banks on May 18 that it “was not interested in continuing conversations,” the filing said. It entered into an exclusivity agreement with F&M.
The parties agreed to a collar where the exchange ratio would be fixed if F&M’s stock price was between $35.95 and $40.35 a share on the last trading day before signing the merger agreement. It would float if the stock price fell below $35.95 a share.
The acquisition “creates immediate value for our shareholders, customers, and communities and I am excited to expand F&M’s community-oriented banking,” Lars Eller, F&M’s president and CEO, said in a press release announcing the deal.
“This transaction is an excellent opportunity for Peoples to become part of a larger community banking organization that offers customers a wider range of financial services,” Eller added.
F&M expects to cut 26.7% of Peoples-Sidney’s annual noninterest expenses and incur $3 million of merger-related charges.