Vermont-based Merchants Bancshares Inc., the parent company Merchants Bank has signed an agreement to acquire Springfield-based NUVO Bank & Trust Co. for approximately $21.8 million in stock and cash, the companies announced today.
“We are excited to enter the Greater Springfield market through a combination with NUVO Bank & Trust,” Merchants Bancshares President and CEO Michael R. Tuttle said in a statement. “The market has witnessed a great deal of change recently, [and] the NUVO team is extremely experienced and the growth opportunity is significant. We plan to invest in and grow the NUVO team and business. While operational areas will be combined, the value created in this merger will be more attributable to revenue growth than expense reduction. We look forward to welcoming the NUVO banking team to our Merchants family.”
Under the terms of the agreement, shareholders of NUVO will be entitled to elect to receive either 0.2416 shares of Merchants common stock or $7.15 in cash for each share of NUVO common stock outstanding, subject to total consideration being comprised of approximately 75 percent stock and 25 percent cash. Holders of NUVO common stock options will receive a cash payment for the difference between $7.15 and the exercise price of the option, while warrant holders of NUVO may either be cashed out in a similar fashion or receive an equivalent warrant to acquire Merchants stock. The merger price of $7.15 per share is equivalent to approximately 133 percent of NUVO’s tangible book value at Dec. 31, 2014, and 51.9 times NUVO’s last 12 months’ earnings. NUVO will remain a distinct brand and operate as a division of Merchants Bank.
The agreement has been approved by both of the boards of directors of Merchants and NUVO. The closing is anticipated to occur during the fourth quarter of 2015, subject to approval by NUVO shareholders, receipt of required regulatory approvals and other customary closing conditions. Merchants expects the transaction to be accretive to its earnings in the first full year of combined operations.
NUVO Chairman Donald R. Chase is expected to join the boards of directors of both Merchants Bancshares Inc. and Merchants Bank. Merchants also has entered into employment agreements with M. Dale Janes, NUVO’s CEO, and Jeffrey S. Sattler, NUVO’s president and chief loan officer.
“There is tremendous opportunity in our market, and we believe that we can best capitalize on it by leveraging the liquidity, expanded lending limits, lower cost deposit base and broader product range of a strong partner like Merchants. Additionally, Merchants’ publicly traded stock and dividends will be attractive to our shareholders,” Chase said in a statement. “We have admired Merchants for some time, and getting to know their team better has reinforced the fact that we share common values and a similar operating philosophy.”
At Dec. 31, 2014, NUVO reported approximately $153 million in assets, $139 million in loans and $134 million in deposits. Merchants had approximately $1.7 billion in total assets as of December 31, 2014, with total shareholders’ equity of approximately $125.8 million.
Griffin Financial Group LLC acted as financial advisor to Merchants Bancshares Inc. and rendered a fairness opinion to its board of directors. Primmer Piper Eggleston & Cramer PC acted as legal counsel to Merchants. Loomis & Co. Inc. acted as financial advisor to NUVO Bank & Trust Co. and rendered a fairness opinion to its board of directors. Cranmore, FitzGerald & Meaney acted as legal counsel to NUVO.
