Before its August announcement of a transaction with ConnectOne Bancorp Inc., Bancorp of New Jersey Inc. had determined it will be unlikely to carry out acquisitions or engage in a merger of equals.
The Fort Lee, N.J.-based bank's board and representatives from Sandler O'Neill met in July 2018 and in January 2019 to discuss growth plans, various industry trends as well as potential deal partners. In the July 2018 meeting, the board and Sandler conducted a "capacity to pay analysis" with respect to potential parties interested to acquire the bank. The meeting in January touched on downward pressure on bank stocks in general. In both meetings, Bancorp of New Jersey's board concluded it will not be feasible to acquire a bank nor engage in a merger of equals.
ConnectOne President and CEO Frank Sorrentino III in March expressed interest to acquire Bancorp of New Jersey. Sorrentino informed the Englewood Cliffs, N.J.-based bank's board at a May meeting that management was evaluating two potential targets, one of which was Bancorp of New Jersey.
ConnectOne and two other companies in June submitted their proposed deal terms to Bancorp of New Jersey. ConnectOne indicated a price range of between $17.00 and $18.00 per Bancorp of New Jersey common share. Another company proposed to acquire Bancorp of New Jersey for $16 to $16.50 per share, while the other party proposed a deal valuing the company at $15 per share.
Bancorp of New Jersey's board determined ConnectOne's offer had the best terms, but it determined that the exclusivity period ConnectOne requested should be reduced from 60 days. ConnectOne subsequently narrowed its price range to between $17.50 and $18.00 per share, and the two sides agreed to a 45-day exclusivity period.
Keefe Bruyette & Woods, ConnectOne's financial adviser, said at an Aug. 7 meeting that the company was prepared to move forward on the basis of an 80% stock and 20% cash election, with an exchange ratio of 0.77x to 0.78x and a cash consideration of $16.00 to $17.00 per Bancorp of New Jersey common share. Bancorp of New Jersey's board approved an exchange ratio of 0.78 and the revised cash consideration range.
ConnectOne told Bancorp of New Jersey on Aug. 12 the expected cash consideration would be $16.25 per share. ConnectOne's board previously discussed potential challenges related to completing the deal, such as recent stock market volatility. The two companies subsequently agreed to the proposed cash consideration and an exchange ratio of 0.78.
The $113 million deal was announced in the pre-market hours of Aug. 16.
