Notable Mergers and Acquisitions of the Day 01/29: (LBAI)/(SOMH) (PHG) (GGP)/(BX)/(BAM)

January 29, 2013 10:08 AM EST Send to a Friend
* Lakeland Bancorp, Inc. (Nasdaq: LBAI) and Somerset Hills Bancorp (Nasdaq: SOMH), the parent company of Somerset Hills Bank, announced that the companies have entered into a definitive Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which Somerset Hills Bancorp will be merged with and into Lakeland Bancorp, with Lakeland Bancorp as the surviving bank holding company. The Merger Agreement provides that the shareholders of Somerset Hills Bancorp will receive, at their election, for each outstanding share of Somerset Hills Bancorp common stock that they own at the effective time of the merger, either 1.1962 shares of Lakeland Bancorp common stock or $12.00 in cash, subject to proration as described in the Merger Agreement, so that 90% of the aggregate merger consideration will be shares of Lakeland Bancorp common stock and 10% will be cash.

Lakeland Bancorp expects to issue an aggregate of 5,780,883 shares of its common stock in the merger, and will also assume outstanding Somerset Hills Bancorp stock options (which will be converted into options to purchase Lakeland Bancorp common stock). The transaction is valued at approximately $64.4 million in the aggregate (excluding the assumption of stock options), or $12.00 per share, which represents a 31% premium over the closing sale price per share of Somerset Hills Bancorp common stock on January 28, 2013. The transaction is expected to be accretive to Lakeland Bancorp's earnings per share in 2014 and slightly dilutive to tangible book value with an estimated earn back prior to December 31, 2014. In addition, the transaction is expected to be immediately accretive to the TCE Ratio (tangible common equity as a percentage of tangible assets) by approximately 25 basis points.

The Merger Agreement provides that immediately after the merger of Somerset Hills Bancorp into Lakeland Bancorp, Somerset Hills Bank will merge with and into Lakeland Bank, with Lakeland Bank as the surviving bank.

Upon the closing of the mergers, Messrs. Edward B. Deutsch and Thomas J. Marino (currently the Chairman of the Board and a director of Somerset Hills Bancorp, respectively) will be appointed to the Boards of Directors of Lakeland Bancorp and Lakeland Bank.

In addition, upon the closing of the mergers, Stewart E. McClure, Jr., currently Vice Chairman and member of the Board of Directors of Somerset Hills Bancorp, and the President, Chief Executive Officer and Chief Operating Officer of Somerset Hills Bancorp and Somerset Hills Bank, will serve as Co-President of Lakeland Bank, the surviving bank. Robert Vandenbergh, Senior Executive Vice President and Chief Operating Officer of Lakeland Bancorp and Lakeland Bank, has been appointed President of Lakeland Bank in connection with the announcement of the Merger Agreement, and will serve as Co-President of Lakeland Bank effective upon the mergers, while retaining his current positions at Lakeland Bancorp. Thomas J. Shara, President and Chief Executive Officer of Lakeland Bancorp and Lakeland Bank, will continue to serve as Chief Executive Officer of Lakeland Bank and as President and Chief Executive Officer of Lakeland Bancorp.

The Boards of Directors of both companies have unanimously approved the mergers. Closing is subject to receipt of approvals from regulators, approval of the holding company merger by Somerset Hills' shareholders, approval of the issuance of Lakeland Bancorp shares in the holding company merger by Lakeland Bancorp's shareholders and other customary conditions. The closing is expected to occur in the second or third quarters of 2013.

Somerset Hills Bancorp's directors and executive officers, owning in the aggregate approximately 7.9% of Somerset Hills Bancorp's outstanding shares on December 31, 2012, have signed voting agreements pursuant to which they have agreed to vote their shares in favor of the holding company merger.

Raymond James is acting as financial advisor to Lakeland Bancorp, and Keefe, Bruyette & Woods is acting as financial advisor to Somerset Hills Bancorp. Lowenstein Sandler LLP is acting as Lakeland Bancorp's legal advisor. Windels Marx Lane & Mittendorf, LLP is acting as Somerset Hills Bancorp's legal advisor.

* Royal Philips Electronics (NYSE: PHG) has signed an agreement regarding the transfer of its Lifestyle Entertainment business (Audio, Video, Multimedia and Accessories) to Funai Electric Co., Ltd.

Under the terms, Funai will pay a cash consideration of EUR 150 million and a brand license fee, relating to a license agreement for an initial period of five and a half years, with an optional renewal of five years. The deal for the Audio, Multimedia and Accessories businesses is expected to close in the second half of 2013. The Video business will transfer in 2017, related to existing intellectual property licensing arrangements. The gain on the transaction will be recorded at the closing date.

The transaction is subject to customary conditions, including regulatory filings and works council procedures. The Remote Control activities, which are predominantly business-to-business, are excluded.

Philips Audio, Video, Multimedia and Accessories make up the Lifestyle Entertainment business group within Philips Consumer Lifestyle. This business group is headquartered in Hong Kong and employs approximately 2,000 people worldwide.

Today’s agreement does not impact any of Funai’s existing brand licensing agreements with Philips.

* After markets closed Monday, General Growth Properties, Inc. (NYSE: GGP) announced the purchase of warrants held by affiliates of The Blackstone Group (NYSE: BX) and Fairholme Funds, Inc. for approximately $633 million. The Company will fund the transactions using its available cash resources.

The warrants were exercisable into approximately 52 million common shares of the Company at a weighted average exercise price of approximately $9.37 per share. The warrants were scheduled to expire in November 2017. Effective with these transactions, Blackstone and Fairholme no longer hold any warrants to acquire the Company's common shares.

In addition, pursuant to an offer previously made by Brookfield Asset Management Inc. (NYSE: BAM) to the Company, the independent members of the Company's Board of Directors decided not to purchase the warrants recently acquired by Brookfield from affiliates of Pershing Square Capital Management, L.P.

Brookfield is now the sole holder of the Company's remaining outstanding warrants which are currently exercisable into approximately 83 million common shares of the Company at a weighted average exercise price of approximately $9.53 per share.

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