Worcester-based Commerce Bancshares Corp., parent of Commerce Bank & Trust Co., has announced plans to swallow up Boston-based Mercantile Capital Corp. and its subsidiary Mercantile Bank & Trust Co. for $26.5 million in cash.
The purchase price equals $9.05 for each of Mercantile’s 2.9 million shares outstanding.
The purchase gives Commerce a physical presence in the Boston market. Combined, the two banks will have assets of $1.6 billion – $1.4 billion of it coming from Commerce – and 16 offices, three in metro Boston.
"We look forward to joining with the talented team at Mercantile and further developing their already deep relationships in their community and with their customers," David G. "Duddie" Massad, Commerce Bancshares chairman, said in a statement.
The merger has been approved by each bank’s board of directors, and is expected to close in the third quarter, subject to regulatory approvals.
"We are pleased that Commerce will maintain and continue to build upon Mercantile’s small business lending initiatives and deep commitment to the Boston market, allowing us to serve a broader range of customers through commercial and real estate lending and become an even more active SBA lender," said Charles P. Monaghan, president and CEO of Mercantile Bank & Trust Co.
"It’s an opportunity that became available, and one we could afford within our capital structure. We didn’t need to issue stock, and we’re not buying something we have to fix first," Brian Thompson, president and CEO of Commerce Bank, told Banker & Tradesman.
Thompson also said the two banks have some common ground in the specialty lending market. Commerce lends to the private aircraft market, as well as to customers in the antique automobiles market.
Mercantile, Thompson said, is the "largest lender in Boston for taxi medallions," Thompson said. "It’s a nice adjunct to our business."
"The distance between Worcester and Boston continues to lessen," Thompson continued. "The cities are getting closer for people who do business."
Sandler O’Neill + Partners, L.P. acted as financial advisor to Commerce Bancshares Corp., and Sterne, Agee & Leach, Inc. acted as financial advisor to Mercantile Capital Corp. Bowditch & Dewey, LLP served as legal counsel to Commerce Bancshares Corp., and Hogan Lovells US LLP served as legal counsel to Mercantile Capital Corp.
