Nicolet Bank acquisition of Commerce State Bank halted
Pandemic caused stock to fall below price set in merger terms
GREEN BAY - Nicolet National Bank terminated its agreement to acquire West Bend-based Commerce State Bank, citing the coronavirus pandemic’s impact on business.
Green Bay-based Nicolet on Monday notified the U.S. Securities and Exchange Commission of its decision to terminate the $129.6 million, all-stock deal, first announced Feb. 17. Mike Daniels, president and CEO of Nicolet, said the bank still believes acquiring Commerce would make sense in other circumstances.
“The reasons why we wanted to do the merger, absent COVID-19, still exist, but the economics and environment necessary no longer do,” Daniels said. “All of it raises an unacceptable degree of uncertainty for both parties.”
Terms of the termination agreement call for Nicolet to pay Commerce a $500,000 lump-sum payment to help the bank address “the costs and negative impact” of entering into the merger agreement in the first place. Nicolet will also transfer 4,000 shares of Commerce stock it owns back to the bank.
The terms of the merger agreement gave either bank the right to terminate the deal if Nicolet’s stock traded below $62 at the time of closing. Nicolet is listed on the NASDAQ Composite Index and records indicate the stock price, which was $72.32 the day the acquisition was announced, has not traded at more than $62 since March 10.
On Monday, Nicolet stock closed at $53.89, up $4.42 for the day.
The bank’s share price dropped as the economic shutdown widened in March, depressing stock prices for many publicly traded companies.
Nicolet executives do not expect the share price to recover by mid-summer, when the merger was expected to close.
“Rather than continuing to pursue and plan for a transaction that is unlikely to close, the parties believe it is in the best interest of their respective shareholders, customers and employees to ... focus more efforts on addressing the impacts of the pandemic on their businesses and customers,” Nicolet wrote in its May 18 SEC filing.
Commerce was one of two banks Nicolet agreed to acquire this year. On March 2, it announced plans to acquire Wausau-based Advantage Community Bank in an all-stock transaction.
Daniels, on Monday, said the acquisition of Advantage remains on track right now.