Six institutions including Muncie, Ind.-based First Merchants Corp. entered into confidentiality agreements during the first week of August in connection with a potential deal with Monroe, Mich.-based MBT Financial Corp.
On Aug. 17, First Merchants submitted a written indication of interest, saying it was prepared to offer MBT shareholders consideration comprised of 90% First Merchants common stock and 10% cash, which had a nominal value of $13.50 per share based upon the then market value of First Merchants common stock.
First Merchants' rivals would soon be out of the picture: one determined it had no further interest, one had another potential deal that could take a priority over its interest in MBT, two others indicated that the pricing level was above their pricing capacity, and another offered an implied pricing level of above $13.00 but below $13.50 per MBT share.
But while MBT wanted to move forward on the general terms offered by First Merchants in its Aug. 17 bid, the offer was not "sufficiently compelling" to grant exclusivity and MBT asked First Merchants to revise the offer.
First Merchants revised its offer on Aug. 25, proposing an all-stock transaction in which MBT shareholders would receive 0.2800 share of First Merchants for each MBT share, which equated to $13.59 per MBT share at that time.
First Merchants later revised the proposed exchange ratio to 0.2750 as a result of its due diligence.
The two companies executed the merger agreement Oct. 9.
Should the deal fall through under certain circumstances, MBT has agreed to pay First Merchants a termination fee of about $12.7 million. First Merchants has agreed to pay MBT a termination fee of $2.5 million if the deal is terminated by either party as a result of the failure to obtain any of the required regulatory approvals and such failure is a result of a regulatory issue directly and solely related to First Merchants.