FIRST MERCHANTS CORPORATION (NASDAQ:FRME) Files An 8-K Entry into a Material Definitive Agreement


FIRST MERCHANTS CORPORATION (NASDAQ:FRME) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01. Entry Into a Definitive Agreement.

On January 25, 2017, First Merchants Corporation, an Indiana
corporation (First Merchants), First Merchants Bank, an Indiana
commercial bank and wholly-owned subsidiary of First Merchants
(“FMB”) and The Arlington Bank, an Ohio savings bank (“Arlington
Bank”), entered into an Agreement and Plan of Reorganization and
Merger (the Merger Agreement), to which, Arlington Bank will,
subject to the terms and conditions of the Merger Agreement, merge
with and into FMB (the Merger), whereupon the separate corporate
existence of Arlington Bank will cease and FMB will survive. Based
on the closing price of First Merchants common stock on January 24,
2017 of>$36.46 per share, the transaction value is estimated at
approximately $75.8 million. The transaction is expected to be a
tax-free stock exchange for Arlington Bank’s shareholders who will
be receiving First Merchants common stock to the Merger. Subject to
Arlington Bank’s shareholders approval of the Merger, regulatory
approvals and other customary closing conditions, the parties
anticipate completing the Merger in the second quarter of 2017. A
copy of the Merger Agreement is filed as Exhibit 2.1 and
incorporated herein by reference.
The Boards of Directors of First Merchants, FMB and Arlington Bank
have approved the Merger Agreement. The members of the Board of
Directors of Arlington Bank have entered into a Voting Agreement to
which they have agreed to vote their shares of Arlington Bank
common stock in favor of the Merger. A copy of the Voting Agreement
is filed as Exhibit 10.1 and incorporated herein by reference.
Subject to the terms and conditions of the Merger Agreement, upon
the completion of the Merger, each share of outstanding Arlington
Bank common stock, $0.50 par value per share, will be converted
into 2.7245 shares (the Exchange Ratio) of First Merchants common
stock, $0.125 stated value per share. The Exchange Ratio is subject
to adjustments for stock splits, stock dividends, recapitalization,
or similar transactions, or as otherwise described in the Merger
Agreement. Fractional shares of First Merchants common stock in
book entry form will not be issued in respect of fractional
interests arising from the Exchange Ratio but will be paid in cash
to the Merger Agreement. Immediately prior to the Merger, each
outstanding option to purchase Arlington Bank common stock will be
converted into the right to receive cash in an amount equal to (a)
the excess, if any, of (i) the Exchange Ratio multiplied by the
average closing price of First Merchants common stock for the ten
(10) trading days preceding the fourth calendar day prior to the
date of the Merger, over (ii) the per share exercise price of such
Arlington Bank stock option, multiplied by (b) the number of shares
of Arlington Bank common stock subject to such stock option, less
(c) applicable tax withholdings.
The Merger Agreement contains representations, warranties and
covenants of Arlington Bank, FMB and First Merchants, including,
among others, covenants (i) to, subject to certain exceptions as
more fully set forth in the Merger Agreement, conduct their
respective businesses in the ordinary course during the period
between the execution of the Merger Agreement and consummation of
the Merger and (ii) prohibiting Arlington Bank, subject to certain
exceptions more fully set forth in the Merger Agreement, from
engaging in certain kinds of transactions during such period. The
Board of Directors of Arlington Bank has adopted a resolution
recommending the approval and adoption of the Merger Agreement by
its shareholders, and Arlington Bank has agreed to hold a
shareholder meeting to put the Merger before its shareholders for
consideration. Arlington Bank has also agreed, for a period of time
and subject to certain exceptions as set forth in the Merger
Agreement, not to (i) solicit proposals relating to alternative
business combination transactions or (ii) enter into discussions or
negotiations or provide confidential information in connection with
any proposals for alternative business combination transactions.
Consummation of the Merger is subject to various conditions,
including, among others, (i) requisite approvals of the holders of
Arlington Bank common stock; (ii) effectiveness of a Form S-4
registration statement relating to the First Merchants common stock
to be issued in the Merger and listing of the First Merchants
common stock to be issued in the Merger on the NASDAQ Global Select
Market; and (iii) receipt of regulatory approvals.
The Merger Agreement contains certain termination rights for both
First Merchants and Arlington Bank. Under certain circumstances,
termination of the Merger Agreement may result in the payment of a
termination fee to First Merchants, all as more fully described in
the Merger Agreement.
The foregoing description of the Merger Agreement and the Voting
Agreement is not complete and is qualified in its entirety by
reference to the Merger Agreement and the Voting Agreement, which
are filed as Exhibits 2.1 and 10.1, respectively, and, as mentioned
above, are incorporated by reference.
Item 7.01. Regulation FD Disclosure.
On January 25, 2017, First Merchants and Arlington Bank issued a
joint press release announcing the execution of the Merger
Agreement. A copy of the press release is attached hereto as
Exhibit 99.1 and incorporated by reference herein.
This filing and the exhibits hereto contain forward-looking
statements made to the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements can often, but not always, be identified by the use of
words like believe, continue, pattern, estimate, project, intend,
anticipate, expect and similar expressions or future or conditional
verbs such as will, would, should, could, might, can, may, or
similar expressions. These forward-looking statements include, but
are not limited to, statements relating to the expected timing and
benefits of the proposed Merger, including future financial and
operating results, cost savings, enhanced revenues, and
accretion/dilution to reported earnings that may be realized from
the Merger, as well as other statements of expectations regarding
the Merger, and other statements of First Merchants goals,
intentions and expectations; statements regarding First Merchants
business plan and growth strategies; statements regarding the asset
quality of First Merchants loan and investment portfolios; and
estimates of First Merchants risks and future costs and benefits,
whether with respect to the Merger or otherwise.
These forward-looking statements are subject to significant risks,
assumptions and uncertainties that may cause results to differ
materially from those set forth in forward-looking statements,
including, among other things: the risk that the businesses of
First Merchants and Arlington Bank will not be integrated
successfully or such integration may be more difficult,
time-consuming or costly than expected; expected revenue synergies
and cost savings from the Merger may not be fully realized or
realized within the expected time frame; revenues following the
Merger may be lower than expected; customer and employee
relationships and business operations may be disrupted by the
Merger; the ability to obtain required regulatory and shareholder
approvals, and the ability to complete the Merger on the expected
timeframe; possible changes in economic and business conditions;
the existence or exacerbation of general geopolitical instability
and uncertainty; the ability of First Merchants to integrate recent
acquisitions and attract new customers; possible changes in
monetary and fiscal policies, and laws and regulations; the effects
of easing restrictions on participants in the financial services
industry; the cost and other effects of legal and administrative
cases; possible changes in the creditworthiness of customers and
the possible impairment of collectability of loans; fluctuations in
market rates of interest; competitive factors in the banking
industry; changes in the banking legislation or regulatory
requirements of federal and state agencies applicable to bank
holding companies and banks like First Merchants affiliate bank;
continued availability of earnings and excess capital sufficient
for the lawful and prudent declaration of dividends; changes in
market, economic, operational, liquidity, credit and interest rate
risks associated with First Merchants business; and other risks and
factors identified in First Merchants filings with the Securities
and Exchange Commission.
First Merchants does not undertake any obligation to update any
forward-looking statement, whether written or oral, relating to the
matters discussed in this filing. In addition, First Merchants and
Arlington Banks past results of operations do not necessarily
indicate either of their anticipated future results, whether the
Merger is effectuated or not.
This filing does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any proxy vote or approval. The proposed Merger will be submitted
to Arlington Banks shareholders for their consideration. In
connection with the proposed Merger, First Merchants will file with
the SEC a Registration Statement on Form S-4 that will include a
Proxy Statement for Arlington Bank and a Prospectus of First
Merchants, as well as other relevant documents concerning the
you may obtain a free copy of the Proxy Statement- Prospectus, when
it becomes available, as well as other filings containing
information about First Merchants, at the
SECs website ( You may also obtain these
documents, free of charge, by accessing First Merchants website
( under the tab Investors, then under
the heading Financial Information and finally under the link SEC
Arlington Bank and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
shareholders of Arlington Bank in connection with the proposed
Merger. Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the Proxy
Statement-Prospectus regarding the proposed Merger when it becomes
available. Free copies of this document may be obtained as
described in the preceding paragraph.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description of Exhibit
Agreement and Plan of Reorganization and Merger among First
Merchants Corporation, First Merchants Bank and The Arlington
Bank, dated January 25, 2017
Voting Agreement, dated January 25, 2017, among First
Merchants Corporation and certain shareholders of The
Arlington Bank
Press Release, dated January 25, 2017


First Merchants Corporation is a financial holding Company. The Company has a bank charter, First Merchants Bank, National Association (the Bank), which is opened for business in Muncie, Indiana. The Bank also operates Lafayette Bank and Trust, Ameriana Bank, Ameriana Financial Services and First Merchants Trust Company as divisions of First Merchants Bank, N.A. The Bank includes approximately 120 banking locations in approximately 30 Indiana, over two Illinois and over two Ohio counties. Its delivery channels include automated teller machines, check cards, interactive voice response systems and Internet technology. The Company, through the Bank, offers a range of financial services, including accepting time deposits, savings and demand deposits; making consumer, commercial, agri-business and real estate mortgage loans; providing personal and corporate trust services; providing full-service brokerage, and providing other corporate services, letters of credit and repurchase agreements.


FIRST MERCHANTS CORPORATION (NASDAQ:FRME) closed its last trading session up +0.94 at 37.40 with 183,166 shares trading hands.