MainSource Financial Group, Inc., Greensburg, has entered into a definitive merger agreement to acquire all common stock of MBT, headquartered in West Harrison, in a cash and stock transaction valued at $33.8 million.
MBT is the holding company for The Merchants Bank and Trust Company, which operates six branches spanning from Dearborn County to Harrison, Western Hills and Hyde Park.
As of Dec. 31, 2013, Merchants had $225.2 million in assets, $180.2 million in loans, $187.9 million in deposits and $23.9 million total equity.
It is anticipated that simultaneous with the merger, The Merchant’s Bank and Trust Company, an Indiana-chartered commercial bank and a wholly-owned subsidiary of MBT, will merge with and into MainSource Bank.
MainSource Bank is an Indiana chartered commercial bank and wholly-owned subsidiary of MainSource, with MainSource Bank as the surviving bank.
“We are thrilled to announce this partnership,” said Archie M. Brown Jr., MainSource President and CEO.
“It strengthens our footprint in Dearborn County, and enhances our growth strategy in Cincinnati, an area where we have already been investing, and presents an opportunity to prudently deploy our strong capital base,” he said.
Given the similarity in cultures and community-based approach, MainSource is the ideal choice as MBT’s partner, said Donald Patterson, MBT president and chief executive office.
“We believe that our employees, customers and community will benefit greatly from this partnership,” said Patterson.
Under the agreement, which was approved by the boards of both companies, MBT shareholders may elect to receive 2.055 shares of MainSource common stock (the exchange ratio) or $35.16 in cash for each share of MBT common stock owned.
The payout is subject to proration provisions specified in the merger agreement that provide for a targeted aggregate split of 60 percent common stock and 40 percent cash.
Based upon the Friday, April 4, 2014, closing price of $16.40 per share of MainSource common stock, the transaction is valued at about $33.8 million.
MainSource expects the transaction to be accretive to 2015 diluted earnings per share by approximately $0.09.
It is projected to be about 4 percent dilutive to tangible book value per share at closing, inclusive of $4 million in pre-tax restructuring charges, with an earn-back period of four years.
The merger is expected to be completed in the third quarter, subject to the satisfaction of customary closing conditions, including regulatory approvals and approval of MBT shareholders.
Keefe, Bruyette and Woods, Inc. is financial advisor to MainSource. MainSource’s legal advisor is Krieg DeVault LLP. Boenning and Scattergood, Inc. is financial advisor to MBT. Vorys, Sater, Seymour and Pease LLP is legal advisor to MBT.