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Merchants Bancshares to buy NUVO Bank & Trust for $21.8 million

Staff writer ▼ | April 29, 2015
Merchants Bancshares, the parent company of Merchants Bank, will acquire NUVO Bank & Trust Company for approximately $21.8 million in stock and cash, which represents $7.15 per share.
NUVO Bank & Trust
Acquisition   $7.15 per NUVO Bank & Trust share
Headquartered in Springfield, Massachusetts, NUVO is focused on providing business loans, deposits and cash management services to small and medium-sized businesses and individuals in western Massachusetts.

At December 31, 2014, NUVO reported approximately $153 million in assets, $139 million in loans and $134 million in deposits. Merchants had approximately $1.7 billion in total assets as of December 31, 2014, with total shareholders' equity of approximately $125.8 million.

Under the terms of the agreement, shareholders of NUVO will be entitled to elect to receive either 0.2416 shares of Merchants common stock or $7.15 in cash for each share of NUVO common stock outstanding, subject to total consideration being comprised of approximately 75% stock and 25% cash.

Holders of NUVO common stock options will receive a cash payment for the difference between $7.15 and the exercise price of the option, while warrant holders of NUVO may either be cashed out in a similar fashion or receive an equivalent warrant to acquire Merchants stock. The merger price of $7.15 per share is equivalent to approximately 133% of NUVO's tangible book value at December 31, 2014 and 51.9 times NUVO's last twelve months' earnings.

The agreement has been approved by both of the boards of Merchants and NUVO. The closing is anticipated to occur during the fourth quarter of 2015, subject to approval by NUVO shareholders, receipt of required regulatory approvals and other customary closing conditions. Merchants expects the transaction to be accretive to its earnings in the first full year of combined operations.

NUVO's Chairman, Donald R. Chase, is expected to join the Boards of Directors of both Merchants Bancshares, Inc. and Merchants Bank. In addition, Merchants has entered into employment agreements with M. Dale Janes, NUVO's Chief Executive Officer, and Jeffrey S. Sattler, NUVO's President and Chief Loan Officer. NUVO will remain a distinct brand and operate as a division of Merchants