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SPAC to acquire BankMobile at $140M enterprise value

Megalith Financial Acquisition Corp. on Aug. 6 agreed to acquire BankMobile Technologies, a unit of Phoenixville, Pa.-based Customers Bank, a unit of Customers Bancorp Inc., in a deal that reflects an enterprise value of $140 million.

Customers Bancorp Chairman and CEO Jay Sidhu is also the executive chairman of Megalith. Other members of Customers Bancorp's board also serve on Megalith's board. Customers Bancorp appointed a special committee of independent directors to review the transaction and obtain a fairness opinion. Customers Bancorp's board approved the transaction by a majority vote with the Megalith directors recusing themselves from the voting process. Sidhu has been seeking a buyer of BankMobile since at least 2016.

The deal is a forward subsidiary merger, wherein BankMobile will merge into a newly formed subsidiary of Megalith Financial, with the latter being the surviving entity. The special purpose acquisition company will change its name to BM Technologies at the closing of the deal.

Under the terms of the deal, Customers Bank will receive about $97 million in consideration, comprised of cash, stock and about $10 million in value attributed to a new technology license with BankMobile. Total consideration is subject to potential adjustment based on various factors, such as transaction expenses. Megalith Financial has received binding commitments of about $20 million for a common stock private placement. Also, at closing, Customers Bank may be repaid a portion of the $40 million debt BankMobile owes the parent company, with BM Technologies assuming any unpaid debt.

The SPAC said in May that it signed a nonbinding letter of intent to acquire a digital banking platform, which was not identified at that time.

The combined company will operate as BM Technologies and is expected to be listed on the New York Stock Exchange. BankMobile's serviced deposits and loans will remain at Customers Bank immediately after the deal completion. After closing, BM Technologies will operate as a fintech that brings banks and business partners together through its digital banking platform.

BankMobile, a digital banking platform launched in January 2015, has more than 2 million accounts, according to a news release.

The SPAC's sponsor entity will forfeit the vast majority of its founder shares and related equity financing at closing, which is expected in the fourth quarter.

Customers Bank is expected to remain as BM Technologies' largest investor by rolling over significant equity into the combined company.

Raymond James is BankMobile's and Customers Bank's financial adviser, while Nelson Mullins Riley and Scarborough and Stradley Ronon Stevens & Young LLP are the bank's legal counsel. Boenning and Scattergood serves as financial adviser to Customers Bancorp's special committee and provided a fairness opinion, while Duane Morris LLP is the committee's independent counsel.

Keefe Bruyette & Woods is Megalith Financial's financial and capital markets adviser. Chardan was also a capital markets adviser for Megalith. Ellenoff Grossman & Schole is the SPAC's legal counsel, while Vantage Point Advisors is the financial adviser of the SPAC's special committee and provided a fairness opinion.