Mercantile Bank, Firstbank To Merge In $151.5 Mln Deal

(RTTNews) - Mercantile Bank Corp. (MBWM) and Firstbank Corp. (FBMI) have agreed to merge in a deal valued at $151.5 million, the two companies said Thursday. The merger will create the third-largest bank headquartered in Michigan by market capitalization and by deposit market share. Shares of Firstbank are gaining almost 19 percent in pre-market tradesfollowing the news.

Under the deal, Firstbank shareholders will receive a fixed ratio of 1.00 share of Mercantile common stock for each share of Firstbank common stock. This implies a transaction value per share of $18.77, or about $151.5 million in the aggregate based upon Mercantile's closing stock price of $18.77 per share as of August 14, 2013.

The deal has been unanimously approved by the board of directors of both the companies. The companies expect the transaction to close by December 31, 2013.

Upon closing of the deal, shareholders of Grand Rapids, Michigan-based Mercantile will own about 52 percent of the stock in the combined company, while shareholders of Alma, Michigan-based Firstbank will own the remaining 48 percent stake.

As part of the merger, Mercantile expects to declare and pay a special cash dividend of $2.00 per share to its shareholders prior to the closing of the merger, subject to the satisfaction of the closing conditions set forth in the merger agreement.

Based on financial results as of June 30, 2013, the combined company would have total assets of $2.8 billion, deposits of $2.3 billion, and loans of $2.0 billion. The combined company will also have a more robust offering of products and services and a retail delivery system with 53 branches statewide.

The combined company's leadership team will be comprised of executives from both the companies. Mercantile Bank Chairman and CEO Michael Price will serve as the president and CEO of the merged company, while Mercantile Bank CFO Charles Christmas and COO Robert Kaminski, along with Firstbank CEO Thomas Sullivan and CFO Samuel Stone will complete the executive team.

Additionally, the board of directors of the combined company will be comprised equally of Mercantile and Firstbank directors. Thomas Sullivan will serve as chairman of the board for a period of one year and Michael Price will become chairman of the board thereafter. The combined company will use the Mercantile name and its corporate headquarters will be in Grand Rapids.

MBWM closed Wednesday's trading at $18.77, down $0.25 on a volume of 7,700 shares.

FMBI closed Wednesday's regular trading session at $16.66. In Thursday's pre-market, the stock is up $3.21 or 18.57 percent to $20.50.