Eagle Bancorp Montana, Inc. (NASDAQ:EBMT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
On August 8, 2019, Eagle Bancorp Montana, Inc. (“Eagle”) and Eagle’s wholly-owned subsidiary, Opportunity Bank of Montana, a Montana chartered commercial bank (“Opportunity Bank”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Western Holding Company of Wolf Point, a Montana corporation (“WHC”), and WHC’s wholly-owned subsidiary, Western Bank of Wolf Point, a Montana chartered commercial bank (“WB”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, WHC will merge with and into Eagle, with Eagle continuing as the surviving corporation (the “Merger”).
Immediately following the effective time of the Merger, WB is expected to merge with and into Opportunity Bank (the “Bank Merger”), with Opportunity Bank surviving and continuing its corporate existence under the name “Opportunity Bank of Montana.”
Subject to the terms and conditions of the Merger Agreement, which has been approved by the Board of Directors of Eagle and WHC, upon completion of the Merger, each outstanding share of WHC common stock will be converted into the right to receive (i) $2,946.51 in cash and (ii) 179.4464 shares of Eagle common stock, subject to the payment of cash in lieu of fractional shares (the “Merger Consideration”). Each outstanding share of Eagle common stock will remain outstanding and be unaffected by the Merger.
The Merger Agreement contains customary representations and warranties from both Eagle and WHC and each have agreed to customary covenants, including, among others, covenants on the part of WHC relating to: (i) the conduct of WHC’s business during the interim period between the execution of the Merger Agreement and the completion of the Merger; (ii) WHC’s obligation to convene and hold a meeting of its shareholders to consider and vote upon the approval of the Merger Agreement; (iii) subject to certain exceptions, the recommendation by the Board of Directors of WHC that WHC shareholders approve the Merger Agreement; and (iv) its non-solicitation obligations relating to alternative acquisition proposals. Eagle has agreed to: (i) file a registration statement for the Eagle common stock to be issued in connection with the Merger; and (ii) create an advisory board and appoint Duane Kurokawa and R.J. Doornek as initial members.
Completion of the Merger is subject to certain customary conditions, including, among others: (i) approval of the Merger Agreement by the holders of two-thirds of WHC’s outstanding common stock; (ii) receipt of required regulatory approvals; (iii) the absence of any law or order prohibiting the completion of the Merger; (iv) the effectiveness of the registration statement for the Eagle common stock to be issued in connection with the Merger; and (v) the quotation and listing of the Eagle common stock to be issued in the Merger on the Nasdaq Global Market.
In addition, Eagle’s obligation to complete the Merger is subject to the satisfaction of certain conditions by WHC, including (i) the Board of Directors of WHC shall not have withheld, withdrawn or modified its recommendation to its shareholders to approve the Merger Agreement and the transactions contemplated thereby and shall not have approved any alternative acquisition proposal, (ii) the receipt of all material consents, approvals and waivers required as a result of the Merger to certain contracts, (iii) the holders of no more than 5% of WHC common stock shall have exercised their dissenters’ rights, (iv) WHC’s adjusted tangible stockholders’ equity must be not less than $10 million and (v) Eagle’s receipt of executed claims letters and restrictive covenant agreements by certain officers and/or directors of WHC and the Bank.
The Merger Agreement contains certain termination rights for Eagle and WHC, as the case may be, applicable upon: (i) mutual consent; (ii) denial of any required regulatory approval; (iii) a breach by the other party that is not or cannot be cured within 30 days’ notice of such breach if such breach would result in a failure of the conditions to closing set forth in the Merger Agreement; (iv) WHC’s shareholders’ failure to approve the Merger Agreement by the required vote; or (v) failure to complete the Merger by May 8, 2020 (subject to a three month extension exercisable by either party if all conditions have been met other than receipt of required regulatory approvals).
Eagle may also terminate the Merger Agreement: (i) upon the WHC Board’s withdrawal, qualification or modification of its recommendation that WHC shareholders approve the Merger Agreement; (ii) if the WHC Board has adopted, approved, recommended, endorsed or otherwise declared advisable the adoption of any alternative acquisition proposal; (iii) if WHC fails to substantially comply with its “no-shop” obligations under the Merger Agreement or its obligation to call, give notice of, convene and hold its shareholders meeting; or (iv) if (A) the average closing price of Eagle’s common stock calculated in accordance with the Merger Agreement exceeds $20.41 per share, (B) Eagle’s common stock outperforms a peer-group index (the Nasdaq Bank Index) by more than 15% and (C) Eagle does not elect to adjust the Stock Consideration by a formula-based amount.
WHC may also terminate the Merger Agreement if (i) the average closing price of Eagle’s common stock calculated in accordance with the Merger Agreement is below $15.09 per share, (ii) Eagle’s common stock underperforms a peer-group index (the Nasdaq Bank Index) by more than 15% and (iii) Eagle does not elect to increase the Stock Consideration by a formula-based amount.
If either party terminates the Merger Agreement due to specified breaches of the Merger Agreement by the other party, the breaching party will be required to pay the non-breaching party a termination fee of $200,000. The Merger Agreement also provides that WHC must pay Eagle a break-up fee of $560,000 if the Merger Agreement is terminated in certain circumstances.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto, and is incorporated into this report by reference thereto. The Merger Agreement has been attached as an exhibit to this report in order to provide investors and security holders with information regarding its terms. It is not intended to provide any other information about Eagle, WHC, or their respective subsidiaries and affiliates. The representations and warranties contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates, are solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact. In addition, such representations and warranties (1) will not survive consummation of the Merger, unless otherwise specified therein, and (2) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by Eagle. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding Eagle, WHC, their respective affiliates, or their respective businesses, the Merger Agreement and the Merger that will be contained in, or incorporated by reference into, the Registration Statement on Form S-4 that will include a proxy statement for WHC and a prospectus of Eagle, as well as in the Form 10-K, Form 10-Q and other filings that Eagle makes with the SEC.
Concurrently with the execution of the Merger Agreement, the directors and executive officers of WHC who hold WHC common stock have entered into company shareholder support agreements with Eagle to which such directors and executive officers have agreed, among other things, to vote their shares of WHC common stock in favor of the proposed transaction. The form of company shareholder support agreement is filed as Exhibit A to the Merger Agreement filed as Exhibit 2.1 hereto and the foregoing summary is qualified in its entirety by reference to such exhibit.
Cautionary Notice Regarding Forward-Looking Statements
This current report on Form 8-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), and is intended to be protected by the safe harbor provided by the same. These statements are subject to numerous risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: failure to obtain the approval of shareholders of WHC in connection with the merger; the timing to consummate the proposed merger; the risk that a condition to closing of the proposed merger may not be satisfied; the risk that a regulatory approval that may be required for the proposed merger is not obtained or is obtained subject to conditions that are not anticipated; the parties’ ability to achieve the synergies and value creation contemplated by the proposed merger; the parties’ ability to promptly and effectively integrate the businesses of Eagle and WHC, including unexpected transaction costs, including the costs of integrating operations, severance, professional fees and other expenses; the diversion of management time on issues related to the merger; the failure to consummate or any delay in consummating the merger for other reasons; changes in laws or regulations; the risks of customer and employee loss and business disruption, including, without limitation, as the result of difficulties in maintaining relationships with employees; increased competitive pressures and solicitations of customers and employees by competitors; the difficulties and risks inherent with entering new markets; and changes in general economic conditions. For additional information concerning factors that could cause actual conditions, events or results to materially differ from those described in the forward-looking statements, please refer to the factors set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Eagle’s most recent Form 10-K report and to Eagle’s most recent Form 8-K reports, which are available online at www.sec.gov. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on the results of operations or financial condition of Eagle or WHC.
Eagle will also discuss the Merger and the Bank Merger in a conference call on August 9, 2019 at 9:00 a.m. Mountain Time. The slide show presentation related to the Merger and the Bank Merger and made available in connection with the conference call is attached hereto as Exhibit 99.2 and furnished herewith, and shall not be deemed “filed” for any purpose under Section 18 of the Exchange Act. Such information may be incorporated by reference in another filing under the Exchange Act or the Securities Act only if and to the extent such subsequent filing specifically references the information incorporated by reference herein.
A copy of the press release issued by Eagle announcing the transaction is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
In connection with the Merger, Eagle released an employee communication on August 9, 2019. A copy of the employee communication is attached hereto as Exhibit 99.3 and incorporated herein by reference.
All information included in the press release, the slide show presentation and employee communication is presented as of the respective dates thereof, and Eagle does not assume any obligation to correct or update such information in the future.
Additional Information and Where to Find It; Participants in the Solicitation
This communication is being made in respect of the proposed merger transaction involving Eagle and WHC. Eagle will file a registration statement on Form S-4 with the United States Securities and Exchange Commission (the “SEC”), which will include a proxy statement of WHC and a prospectus of Eagle, as well as other relevant documents concerning the proposed merger. This communication (including the documents referred to herein) does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain these documents, when available, free of charge at the SEC’s Web site (www.sec.gov). In addition, documents filed with the SEC by Eagle will be available free of charge by contacting the Secretary of Eagle at (406) 442-3080.
Eagle will file with the SEC a registration statement on Form S-4 containing a proxy statement of WHC and a prospectus of Eagle, and Eagle will file other documents with respect to the proposed merger. A definitive proxy statement/prospectus will be mailed to shareholders of WHC. Investors and shareholders of Eagle and WHC are urged to read the entire proxy statement/prospectus and other documents that will be filed with the SEC carefully and in their entirety when they become available because they will contain important information. Investors and shareholders will be able to obtain free copies of the registration statement and the proxy statement/prospectus (when available) and other documents filed with the SEC by Eagle through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Eagle will be available free of charge on Eagle’s Internet website or by contacting Eagle.
Eagle, WHC, their respective directors and executive officers and other members of management and employees may be considered participants in the solicitation of proxies in connection with the proposed Merger. Information about the directors and executive officers of Eagle is set forth in its proxy statement for its 2019 annual meeting of shareholders, which was filed with the SEC on March 12, 2019 and its Current Reports on Form 8-K. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
(d) The following exhibits are filed or finished as part of this report:
Eagle Bancorp Montana, Inc. Exhibit
EX-2.1 2 ex_153545.htm EXHIBIT 2.1 ex_153545.htm Exhibit 2.1 EXECUTION COPY AGREEMENT AND PLAN OF MERGER DATED AS OF AUGUST 8,…
To view the full exhibit click here
About Eagle Bancorp Montana, Inc. (NASDAQ:EBMT)
Eagle Bancorp Montana, Inc. is the bank holding company for Opportunity Bank of Montana (the Bank). The Bank is a Montana-chartered commercial bank. The Bank has equity investments in Certified Development Entities, which have received allocations of New Markets Tax Credits (NMTC). The Company offers wealth management services at its locations through financial advisors employed by the Bank. The Bank originates residential mortgages (one- to four-family) and commercial real estate loans, real estate construction loans, home equity loans, consumer loans and commercial loans. The Bank offers a range of deposit accounts, which include certificates of deposit accounts ranging in terms from 90 days to 5 years, as well as, checking, savings and money market accounts. Individual retirement accounts (IRAs) are included in certificates of deposit.
