Under terms of the agreement, Waypoint shareholders are entitled to receive $28 in cash or approximately 1.3 shares of Sovereign common stock or a combination of both for every Waypoint share they hold. Allocation procedures stipulate that 70% of Waypoint shares will be exchanged for Sovereign shares and 30% will be redeemed for cash. If Waypoint shareholders fail to elect this ratio, Sovereign is permitted to require them to accept more stock or cash in order to achieve the 70/30%, stock/cash ratio.
Sovereign is a $45-billion financial institution. It operates in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island. Waypoint is a $5.3-billion bank holding company, and its primary Pennsylvania service area includes Dauphin, Cumberland, York, Lancaster, and Lebanon counties.
Jay S. Sidhu, chairman and CEO of Sovereign, says the acquisition "creates leading market share positions in new and contiguous micro-markets. Waypoint has a business model emphasizing low risk retail and commercial banking, which is of a manageable size to facilitate integration. In addition, there are meaningful cost savings due to branch overlap and economies of scale," he adds.
The merger, subject to approval by various regulatory agencies, is expected to close during the fourth quarter of this year.
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