Announcement • Jul 30
Citizens Financial Services, Inc. (OTCPK:CZFS) completed the acquisition of MidCoast Community Bancorp, Inc. (OTCPK:MDCT).
Citizens Financial Services, Inc. (OTCPK:CZFS) ("Citizens") entered into an indication of interest to acquire MidCoast Community Bancorp, Inc. (OTCPK:MDCT) ("MidCoast") for $57 million on July 18, 2019. Citizens Financial Services, Inc. signed a definitive agreement to acquire MidCoast Community Bancorp, Inc. for $57 million on September 18, 2019. Under the terms of the agreement, each outstanding share of MidCoast’s class A common stock and class B common stock will be converted into the right to receive, at the election of the shareholder, either $6.50 in cash, without interest, or 0.1065 shares of Citizens common stock, or a combination of cash and stock, subject to proration and allocation to ensure that 75% of such outstanding shares of MidCoast’s class A and class B common stock are exchanged for shares of Citizens’ common stock and the remaining 25% are exchanged for cash. Holders of all outstanding and unexercised options to acquire shares of MidCoast’s common stock under the Stock Incentive Plans and all warrants to acquire shares of MidCoast’s common stock that are outstanding and unexercised immediately before the effective time shall automatically become vested and shall be cancelled and converted into the right to receive from Citizens a cash payment in an amount, subject to any required withholding taxes, equal to the product of the number of shares of MidCoast’s common stock subject to such Midcoast warrants or options at the effective time and the amount by which $6.5 exceeds the exercise price per share of such Midcoast warrant or options. Under the terms of the merger agreement, Citizens and MidCoast will merge and First Citizens Community Bank and MidCoast Community Bank will merge, resulting in Citizens and First Citizens Community Bank as the surviving institutions. If the merger agreement is terminated under certain circumstances set forth in the merger agreement, MidCoast has agreed to pay Citizens a cash termination fee of $1.2 million.
The senior management of Citizens Financial Services, Inc. and First Citizens Community Bank will remain the same following the merger. At the effective time, the officers of the resulting bank shall consist of Randall E. Black, President and Chief Executive Officer, Mickey L. Jones, Executive Vice President, Chief Operating Officer and Chief Financial Officer, Gina Marie Boor, Corporate Secretary and other directors will consist of Randall E. Black, Robert W. Chappell, R. Lowell Coolidge, Rinaldo A. DePaola, Thomas E. Freeman, Roger C. Graham, Jr., E. Gene Kosa, R. Joseph Landy, Christopher W. Kunes, David Z. Richards, Jr. and Alletta M. Schadler. The transaction is subject to the approval of the shareholders of MidCoast at a special meeting to be held on March 3, 2020, regulatory approvals, effectiveness of the merger registration statement, merger qualifying for a reorganization under Code Section 368(a), dissenting shares not constituting more than 10% of the outstanding shares of Citizens class A common stock, both Citizen and MidCoast receiving a legal opinion from their respective counsels that the merger will qualify as a tax-free reorganization under United States federal income tax laws and other customary closing conditions. The Boards of Directors of each of Citizens and MidCoast have unanimously approved the merger. Each of the directors of MidCoast have agreed to vote their shares in favor of the approval of the agreement at the shareholders’ meeting to be held to vote on the transaction. As on the week ending February 13, 2020, the transaction has been approved by Pennsylvania Department of Banking and Securities. The transaction is currently expected to close in the first quarter of 2020. As of October 23, 2019, the transaction is expected to close in the second quarter of 2020. The transaction will be immediately accretive to the earnings and tangible book value at close.
Kimberly J. Decker of Barley Snyder LLP acted as the legal advisor to Midcoast and Victor L. Cangelosi and Thomas P. Hutton of Luse Gorman, PC acted as legal advisor to Citizens Financial Services. Dan Flaherty and Matt Veneri of Janney Montgomery Scott LLC acted as financial advisor to Citizens and has rendered a fairness opinion to its Board of Directors. Boenning & Scattergood, Inc. acted as financial advisor to MidCoast and has rendered a fairness opinion to its Board of Directors. MidCoast agreed to pay Boenning a non-refundable cash fee equal to 1.35% of the implied transaction value, $10,000 of which was paid when Boenning was retained, $10,000 of which was paid upon completion of a descriptive memorandum, $70,000 of which was paid concurrently with the rendering of Boenning’s opinion, and the balance of which is contingent upon the consummation of the merger. Boenning’s fee for rendering the fairness opinion was not contingent upon Boenning reaching any particular conclusion. Broadridge Corporate Issuer Solutions, Inc. acted as exchange agent for Citizens Financial Services.
Citizens Financial Services, Inc. (OTCPK:CZFS) completed the acquisition of MidCoast Community Bancorp, Inc. (OTCPK:MDCT) on April 17, 2020. Citizens issued 373,356 shares of common stock as consideration in the merger and now has 3,879,365 shares of common stock outstanding as a result of the completion of the merger. Shareholders who made a valid all-stock election are entitled to receive 0.1065 shares of Citizens common stock for each of their shares of MidCoast common stock, plus cash in lieu of a fractional share based on a price of $61 per share, without interest. Shareholders who made a valid all-cash election or a valid mixed stock/cash election are entitled to receive $6.50 in cash, without interest, for approximately 55% of their shares of MidCoast common stock for which they made a valid cash election and 0.1065 shares of Citizens common stock for each of their remaining shares of MidCoast common stock, plus cash in lieu of a fractional share based on a price of $61 per share, without interest; or Shareholders who made no election or an invalid election are entitled to receive 0.1065 shares of Citizens common stock for each of their shares of MidCoast common stock, plus cash in lieu of a fractional share based on a price of $61 per share, without interest.