Item 1.01 Entry into a Material Definitive Agreement
On June 13, 2017, Horizon Bancorp (“
Horizon
”) entered into an Agreement and Plan of Merger (the “
Merger Agreement
”) with Wolverine Bancorp, Inc., a Maryland corporation (“
Wolverine Bancorp
”). Pursuant to the Merger Agreement, Wolverine Bancorp will merge with and into Horizon, with Horizon as the surviving corporation (the “
Merger
”). Immediately following the Merger, Wolverine Bank, a federally chartered savings bank and wholly-owned subsidiary of Wolverine Bancorp, will merge with and into Horizon Bank, National Association, the wholly-owned national bank subsidiary of Horizon (“
Horizon Bank
”), with Horizon Bank as the surviving bank. The Merger Agreement is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The boards of directors of each of Horizon and Wolverine Bancorp have approved the Merger and the Merger Agreement. Subject to the approval of the Merger by Wolverine Bancorp’s shareholders, regulatory approvals, and other customary closing conditions, the parties anticipate completing the Merger at the end of the third or early in the fourth quarter of 2017.
Upon completion of the Merger, each Wolverine Bancorp shareholder will have the right to receive fixed consideration of (i) $14.00 per share in cash, and (ii) 1.0152 shares of Horizon common stock for each share of Wolverine Bancorp’s common stock. Based on Horizon’s June 13, 2017 closing price of $27.50 per share as reported on the NASDAQ Global Select Market, the implied price per share of Wolverine Bancorp’s common stock would be $41.92, for an estimated transaction value of $91.8 million.
All of the members of the board of directors and the executive officers of Wolverine Bancorp and Wolverine Bank, in their capacity as shareholders, have entered into a voting agreement pursuant to which they have agreed to vote their shares of Wolverine Bancorp common stock in favor of the approval and adoption of the Merger Agreement and the Merger. A copy of the voting agreement is attached to the Merger Agreement and is also included with this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference herein. In addition, pursuant to the Merger Agreement and subject to certain terms and conditions, the board of directors of Wolverine Bancorp has agreed to recommend the approval and adoption of the Merger Agreement and the Merger to the Wolverine Bancorp shareholders and will solicit proxies voting in favor of the Merger Agreement and Merger from Wolverine Bancorp’s shareholders.
The Merger Agreement contains representations, warranties, and covenants of Wolverine Bancorp and Horizon including, among others, covenants requiring Wolverine Bancorp (i) to conduct its business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger or the earlier termination of the Merger Agreement, and (ii) to refrain from engaging in certain kinds of transactions during such period. In addition, Wolverine Bancorp has agreed not to solicit proposals relating to alternative business combination transactions or, subject to certain exceptions, enter into discussions or negotiations or provide confidential information in connection with any proposals for alternative business combinations.
The Merger Agreement also provides certain termination rights for both Horizon and Wolverine Bancorp, and further provides that upon termination of the Merger Agreement under certain circumstances, Wolverine Bancorp will be obligated to pay Horizon a termination fee of $3,539,000. Also, Wolverine Bancorp may terminate the Merger Agreement if, during the five-day period following the receipt of all approvals and consents necessary for consummation of the Merger, both (i) the average daily closing sales prices of a share of Horizon common stock during the 15 consecutive trading days (counting only days on which shares actually traded on the NASDAQ Global Select Market) before the date of receipt of the approvals and consents is less than $23.02, and (ii) Horizon’s share price declines by an amount that is at least 15% greater than the corresponding price decline in the SNL Small Cap U.S. Bank and Thrift Index.
As referenced above, the consummation of the Merger is subject to various conditions, including (i) receipt of the requisite approval of the Merger Agreement and Merger by the shareholders of Wolverine Bancorp, (ii) receipt of all required regulatory approvals, (iii) the absence of any law or order prohibiting the closing of the Merger, (iv) the effectiveness of the registration statement to be filed by Horizon with the Securities and Exchange Commission (the “
SEC
”) with respect to the Horizon common stock to be issued in the Merger, and (v) Wolverine Bancorp’s consolidated shareholders’ equity as of the end of the month prior to the effective time of the Merger, after certain adjustments, must not be less than $62.8 million. In addition, each party’s obligation to consummate the Merger is subject to certain other conditions, including the accuracy of the representations and warranties of the other party and compliance of the other party with its covenants.
Eric P. Blackhurst, a member of Wolverine Bancorp’s board of directors, will be appointed to the boards of directors of Horizon and Horizon Bank effective as of the closing of the Merger.
The foregoing description of the Merger Agreement and the Voting Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement and the Voting Agreement, which are filed as Exhibits 2.1 and 10.1, respectively, and incorporated by reference.
Cautionary Statement Regarding Representations and Warranties
The
representations, warranties, and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, and are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures.