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Lakeland initially had only 'modest level of interest' in a deal with Highlands

In early 2018, four companies "with a strong capacity to pay expressed significant interest" in a potential deal with Vernon, N.J.-based Highlands Bancorp Inc.

Lakeland Bancorp Inc. did not feature in the group as the Oak Ridge, N.J.-based company indicated only a "modest level of interest" in Highlands when initially approached by FIG Partners, Highlands' financial adviser. Lakeland was evaluating another strategic initiative at that time.

One of the four suitors dropped out of the process May 24.

Five days later, Highlands CEO Steven Ackmann had lunch with Lakeland CEO Thomas Shara. Ackmann told Shara that Highlands was exploring a possible sale. Shara said that if Highlands were to consider a deal, Lakeland would be interested.

On June 1, the three remaining suitors offered per-share prices for Highlands ranging from $18.00 to $20.50.

On June 4, Ackmann described to the Highlands board his meeting with Shara, and the board discussed Lakeland's renewed interest. It was agreed that FIG Partners would contact the Lakeland CEO, who, on June 13, delivered an indication of interest that valued Highlands at $20 per share.

Highlands was not able to grant exclusivity at this time because it was still evaluating and negotiating an indication from another suitor.

Lakeland on June 25 provided an updated pricing indication letter, valuing Highlands at $21 per share. Eventually, Highlands moved forward with Lakeland.

Shara on Aug. 1 stated that Lakeland's diligence was substantially complete, and that Lakeland was prepared to offer $20 per share, with an exchange ratio to be determined near execution of a definitive agreement. Ackmann asked whether Lakeland could increase its offer; Lakeland declined. Later that day, the exchange ratio was discussed, and a ratio of 1 Lakeland share for each Highlands share was offered.

Lakeland ultimately agreed to increase the ratio to 1.015, valuing the all-stock deal at $56.7 million. The parties on Aug. 23 signed the merger agreement, which also provides that if the deal is terminated under certain circumstances, the sum of the termination fee and the termination expenses payable by Highlands to Lakeland shall not exceed $2.6 million.