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Shore Community's adviser contacted 11 companies regarding interest in merger

The process that resulted in the acquisition of Toms River, N.J.-based Shore Community Bank by Cranbury, N.J.-based 1st Constitution Bancorp began when Shore Community invited Raymond James to its annual shareholder meeting in August 2018. Following that meeting, Raymond James was retained to serve as financial adviser and assist Shore Community in finding a strategic transaction.

In the first two months of 2019, Raymond James prepared a report on parties that could be interested in a strategic transaction or merger with Shore Community. The report was reviewed and approved by the Shore Community board of directors at its Feb. 21 meeting.

Raymond James' representatives contacted 11 financial institutions regarding their interest in a strategic transaction. Nine of those 11 banks signed non-disclosure agreements and were given access to a virtual data room setup by Raymond James to provide initial due diligence material. Five of those nine companies submitted indication letters, pricing the company between $13.80 per share and $17.00 per share, which was 1st Constitution's indication.

On March 15, Shore Community's strategic planning committee met with representatives of Raymond James and Windels Marx Lane & Mittendorf LLP, Shore Community's counsel, to review the indication letters.

After meetings of Shore Community's board and its advisers and a review of the indication letters, the company's board decided to invite 1st Constitution and another financial institution, the two parties with the highest indicated valuations, to conduct detailed on-site due diligence at Shore Community.

While one institution withdrew from the bidding process, representatives of D.A. Davidson & Co., 1st Constitution's financial adviser, submitted a revised indication valuing Shore Community at $16.35 per share.

After several days of communication between representatives of Raymond James and D.A. Davidson & Co., Shore Community was informed on May 1 that 1st Constitution would put forward a final indication of $16.50 per share.

On May 6, Shore Community's board, after discussion with its advisers, elected to proceed to negotiate a definitive agreement with 1st Constitution reflecting the terms of 1st Constitution's indication. On June 20, Shore Community's board unanimously approved the merger and the merger agreement, subject to the resolution of a remaining open issue related to a closing condition, which was resolved June 21.

On June 21, 1st Constitution's board unanimously voted to approve the merger and the merger agreement. 1st Constitution and Shore Community announced that they had entered into the merger agreement on the morning of June 24.