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German American Bancorp identified First Security as potential target in 2017

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German American Bancorp identified First Security as potential target in 2017

The German American Bancorp Inc. management team and Raymond James representatives met periodically from September 2017 to December 2017, to review possible acquisitions of other financial institutions and other ways to increase shareholder value.

Jasper, Ind.-based German American expressed its desire in these meetings to expand into the Kentucky market via acquisitions and identified Owensboro, Ky.-based First Security Inc. as a potential target.

On Jan. 11, First Security President and CEO Michael Beckwith and a Raymond James representative, and German American Chairman and CEO Mark Schroeder, discussed at German American's headquarters the Kentucky banking market, possible ways to structure a deal, board and personnel issues, and German American's growth strategy into the Kentucky market.

Six days later, the two companies entered into a mutual confidentiality agreement to further explore a possible deal.

The deal process continued, with German American delivering a nonbinding indication of interest to First Security on April 5. It proposed, among other things, that total merger consideration be split between stock and cash on roughly a 70-to-30 basis, and First Security shares be valued at $40 per share, and Beckwith be appointed president of German American's new Kentucky banking division.

On May 22, the boards of both companies met to review and approve the proposed merger agreement, which provided for merger consideration of 0.7982 of a German American share plus $12 in cash for each First Security share. The deal was announced the same day.

The Form S-4 containing a background of the deal also indicated that if the merger agreement is terminated under certain circumstances, First Security may be required to pay a termination fee of $3 million to German American.