STEWARDSHIP FINANCIAL CORPORATION (NASDAQ:SSFN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
Agreement and Plan of Merger
On June 6, 2019, Stewardship Financial Corporation (“Stewardship”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Columbia Financial, Inc. (“Columbia”), the parent company of Columbia Bank, a federally chartered savings bank, and Broadway Acquisition Corp. (“Merger Sub”), a wholly owned subsidiary of Columbia.
to the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge (the “First-Step Merger”) with and into Stewardship, with Stewardship as the surviving entity, and immediately following the effective time of the First-Step Merger, Stewardship will merge with and into Columbia, with Columbia as the surviving entity (together with the First-Step Merger, the “Merger”). It is anticipated that immediately following the consummation of the Merger, Atlantic Stewardship Bank, our wholly-owned subsidiary and a New Jersey state-chartered bank, will merge with and into Columbia Bank with Columbia Bank as the surviving bank.
The Merger Agreement has been unanimously approved by the Boards of Directors of each of Stewardship and Columbia. Subject to the approval of the Merger Agreement by Stewardship’s shareholders, the receipt of all required regulatory approvals and the satisfaction or waiver of other customary closing conditions, the parties anticipate that the transactions contemplated by the Merger Agreement will close in the fourth quarter of 2019.
At the effective time of the First-Step Merger, each outstanding share of Stewardship common stock, except for treasury shares held by Stewardship and shares held, other than in a fiduciary capacity or in satisfaction of a debt previously contracted, by Columbia, shall be converted into the right to receive from Columbia $15.75 in cash, without interest (the “Merger Consideration”). In addition, each share of unvested Stewardship restricted stock will fully vest and will be converted into the right to receive, without interest, the Merger Consideration.
to the terms of the Merger Agreement, at the effective time of the First-Step Merger, each of Columbia and Columbia Bank will increase the size of its Board of Directors by one member and appoint Paul Van Ostenbridge, the current President and Chief Executive Officer and long-standing director of Stewardship, to serve on its Board of Directors.
The Merger Agreement contains customary representations and warranties from both Stewardship and Columbia, each with respect to its and its subsidiaries’ businesses. Each party has also agreed to customary covenants, including, among others, covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and the effective time of the First-Step Merger, and Stewardship’s obligation to call a meeting of its shareholders to adopt and approve the Merger Agreement. Subject to certain exceptions, Stewardship has agreed to recommend that its shareholders adopt and approve the Merger Agreement. In addition, Stewardship has agreed that, subject to certain exceptions, it will not, and will cause its subsidiaries and their representatives not to, solicit, initiate, encourage or take any action to facilitate (including by providing non-public information) any inquiries or proposals with respect to any acquisition proposals. The Merger Agreement provides certain termination rights for each of Stewardship and Columbia, and further provides that if the Merger Agreement is terminated under certain circumstances, Stewardship will be obligated to pay Columbia a termination fee equal to $5.4 million.
As described above, the consummation of the Merger is subject to customary closing conditions, including, but not limited to, (i) receipt of the requisite approval of Stewardship’s shareholders, (ii) receipt of all required regulatory approvals and (iii) the absence of any law or order prohibiting the closing. In addition, each party’s obligation to consummate the Merger is subject to certain other customary conditions, including (i) the accuracy of the representations and warranties of the other party subject to certain materiality standards and (ii) compliance in all material respects by the other party with its covenants.
The Merger Agreement includes customary representations, warranties and covenants of Stewardship and Columbia made to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Merger Agreement and are not intended to provide factual, business or financial information about Stewardship or Columbia. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to shareholders or different from what a shareholder might view as material, may have been used for purposes of allocating risk between Stewardship and Columbia rather than establishing matters as facts, may have been qualified by certain disclosures not reflected in the Merger Agreement that were made to the other party in connection with the negotiation of the Merger Agreement and generally were solely for the benefit of the parties to the Merger Agreement. Shareholders should read the Merger Agreement together with the other information concerning Stewardship and Columbia that is publicly filed in reports and statements with the Securities and Exchange Commission (the “SEC”).
The foregoing description of the Merger Agreement is included to provide information regarding its terms and 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 to this Current Report on Form 8-K, and is incorporated herein by reference.
Voting Agreements
In addition, on June 6, 2019, simultaneous with the execution of the Merger Agreement, Stewardship and Columbia entered into separate voting agreements with each of the directors (in their capacity as shareholders) of Stewardship (collectively, the “Voting Agreements”), in which each such shareholder agreed, among other things, to vote in favor of the Merger the shares of Stewardship common stock over which he or she has sole right to dispose and the sole right to vote. In addition, each such shareholder has agreed to vote against any proposal made in competition with the Merger, as well as certain other restrictions with respect to the voting and transfer of such shareholder\’s shares of Stewardship common stock.
The foregoing description of the Voting Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Voting Agreements, a form of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On June 7, 2019, Stewardship and Columbia issued a joint press release announcing that Columbia and Stewardship entered into the Merger Agreement. The joint press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.