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Item 1.01.
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Entry into a Material Definitive Agreement.
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On September 8, 2021, JMP Group LLC, a Delaware limited liability company (“JMP”, or the “Company”), Citizens Financial Group, Inc., a Delaware corporation (“Citizens”), and Jolt Acquisition LLC, a Delaware limited liability company and direct, wholly owned subsidiary of Citizens (“Merger Subsidiary”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Subsidiary will merge with and into JMP, whereupon the separate existence of Merger Subsidiary will cease, and the Company will be the surviving corporation as a direct wholly owned subsidiary of Citizens (the “Merger”).
Pursuant to the Merger Agreement, each outstanding common share of JMP will be converted into the right to receive cash consideration of $7.50 (the “Merger Consideration”), or approximately $149 million in cash. The transaction is targeted to close in the fourth quarter of 2021, subject to approval by the shareholders of JMP, receipt of required regulatory approvals, and satisfaction of other customary closing conditions.
At the Effective Time, as defined in the Merger Agreement, each outstanding option to purchase JMP common shares under JMP’s Equity Incentive Plan (the “Stock Plan”), whether vested or unvested, shall be converted into an option to purchase a number of shares of common stock of Citizens, equal to the product (rounded down to the nearest whole number) of the total number of common shares subject to such option immediately prior to the Effective Time, multiplied by the per share Merger Consideration divided by the volume weighted average of the closing sale prices per share of Citizens common stock on the New York Stock Exchange on each of the five full consecutive trading days ending on and including the third business day prior to the closing date of the Merger (the “Equity Award Exchange Ratio”). The exercise price per share (rounded up to the nearest whole cent) shall be equal to the exercise price per share of the common shares subject to such JMP option immediately prior to the Effective Time, divided by the Equity Award Exchange Ratio. At the Effective Time, each JMP restricted stock unit (“RSU”) under the Stock Plan shall be converted into an RSU award representing the right to receive the number of denominated shares of Citizens common stock equal to the product (rounded down to the nearest whole number) of the total number of common shares subject to such JMP RSU award immediately prior to the Effective Time multiplied by the Equity Award Exchange Ratio.
The Merger Agreement contains customary representations, warranties and covenants, including, among other things, covenants that, subject to certain exceptions: (i) JMP will conduct its business in the ordinary course consistent with past practice until the effective time of the Merger, (ii) Citizens, JMP and Merger Subsidiary will each use its reasonable best efforts to consummate the Merger and the other transactions contemplated by the Merger Agreement, (iii) JMP will not solicit, initiate, encourage or otherwise facilitate the submission of any alternative acquisition proposal or enter into or participate in discussions or negotiations regarding, or provide any non-public information regarding JMP in connection with, alternative acquisition proposals; (iv) JMP will call and hold a meeting of its shareholders to consider and vote upon the adoption of the Merger Agreement, and (v) the JMP Board of Directors will recommend the adoption of the Merger Agreement by its shareholders. Under the terms of the Merger Agreement, JMP may be permitted to declare a special cash dividend to its shareholders prior to closing in an amount up to $5,000,000 in the aggregate but only if JMP realizes a targeted valuation with respect to certain marketable securities owned by JMP.
Consummation of the Merger is subject to various conditions, including: (i) adoption of the Merger Agreement by JMP’s shareholders in accordance with Delaware law and the JMP LLC Agreement, (ii) the absence of any applicable law that prohibits, makes the Merger illegal or enjoins the consummation of the Merger, (iii) the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act relating to the Merger having expired or been terminated and (iv) certain other regulatory approvals, including the Financial Industry Regulatory Authority, having been obtained as required by applicable law. Each party’s obligation to consummate the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) performance in all material respects by the other party of its obligations under the Merger Agreement and (iii) absence of any developments subsequent to the date of the Merger Agreement that would have a material adverse effect on JMP.
The Merger Agreement, in addition to providing that the parties can mutually agree to terminate the Merger Agreement, contains certain termination rights for JMP and Citizens, as the case may be, including upon: (1) March 8, 2022, if the Merger has not been completed by that time; (2) the approval of any governmental authority required for consummation of the Merger is denied; (3) failure of JMP’s shareholders to approve the Merger; (4) a breach by the other party that cannot be cured by thirty days after written notice thereof is given if such breach would result in a failure of the conditions to closing set forth in the Merger Agreement; (5) a material breach of the no shop provision of the Merger Agreement; (6) the occurrence of a Change of Recommendation (as defined in the Merger Agreement); (7) failure by the JMP board of directors to publicly confirm its board recommendation within five business days of a written request, made prior to JMP stockholder approval, by Citizens; (8) the board of directors of JMP recommending that shareholders tender their shares in a tender offer by another party, or fails to recommend against such tender offer; or (9) the board of directors of JMP authorizing JMP, subject to complying with the terms of the Merger Agreement, including providing the required notice to Citizens, to enter into a written agreement concerning a Superior Proposal (as defined in the Merger Agreement). Upon termination of the Merger Agreement under specified circumstances, JMP may be required to pay Citizens a termination fee of 4.0% of the total Merger Consideration.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto, and is incorporated by reference into this report. The Merger Agreement has been included to provide security holders with information regarding its terms. It is not intended to provide factual information about the parties or any of their respective subsidiaries or affiliates. The representations, warranties and covenants of each party as set forth in the Merger Agreement were made only for purposes of that agreement and as of specific dates, are solely for the benefit of the parties to the Merger Agreement, may be subject to limitations, qualifications and exceptions agreed upon or to be agreed upon by the parties (including being qualified by confidential disclosures), and 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 parties that differ from those applicable to investors. Accordingly, investors should read the Merger Agreement together with the other information concerning Citizens and JMP that each company publicly files in reports and statements with the SEC.