Lakeland Bancorp Inc. (NasdaqGS:LBAI) entered into an agreement and plan of merger to acquire Somerset Hills Bancorp (NasdaqGM:SOMH) from Sandler O' Neill Asset Management LLC, PRB Investors LP, Prb Advisors and other shareholders for $64.5 million in cash and stock on January 28, 2013. Each shareholder of Somerset Hills Bancorp will have the election right to receive either 1.1962 shares of common stock of Lakeland Bancorp Inc. or $12 in cash, subject to proration, ... so that 90% of the aggregate merger consideration will be shares of Lakeland common stock and 10% will be cash. All outstanding options of Somerset Hills Bancorp will be converted into options to purchase Lakeland common stock in 1.1962 exchange ratio. The exercise price of each new stock option will equal the exercise price applicable to the corresponding old stock option divided by the exchange ratio. Immediately following the consummation of the transaction, Somerset Hills Bank will merge with and into Lakeland Bank. The agreement can be terminated by both the parties in certain circumstances. If Somerset Hills Bancorp enters into an alternative acquisition agreement with respect to a superior proposal then it will pay to Lakeland Bancorp a termination fee of $2.95 million and Lakeland Bancorp’s out-of-pocket expenses in an amount up to $0.33 million. Each member of the Board of Directors of Somerset Hills Bancorp and its executive officers, Stewart E. McClure, James M. Nigro (Executive Vice President and Senior Loan Officer) and Alfred J. Soles (Executive Vice President and Chief Financial Officer), who own in the aggregate approximately 7.9% of the Somerset common stock outstanding have signed voting agreements and agreed to vote in favor of the deal. Edward B. Deutsch and Thomas J. Marino (currently the Chairman of the Board and a Director of Somerset Hills Bancorp, respectively) will be appointed to the Boards of Directors of Lakeland Bancorp. Stewart E. McClure, currently Vice Chairman, member of the Board of Directors, President, Chief Executive Officer and Chief Operating Officer of Somerset Hills Bancorp entered into an employment agreement with Lakeland Bancorp Inc. which states that Stewart E. McClure will serve as Co-President of Lakeland Bank, at an annual base salary of $0.32 million. Robert Vandenbergh, Senior Executive Vice President and Chief Operating Officer of Lakeland Bancorp have been appointed President of Lakeland Bancorp and will serve as Co-President of Lakeland Bank. Thomas J. Shara, President and Chief Executive Officer of Lakeland Bancorp and Lakeland Bank, will continue to serve as Chief Executive Officer of Lakeland Bank and as President and Chief Executive Officer of Lakeland Bancorp. The deal is subject to approval by shareholders of both Somerset Hills Bancorp and Lakeland Bancorp, approval by third parties, effectiveness of the registration statement on Form S-4 for the Lakeland common stock issuable in the merger, approval of the listing on the NASDAQ Global Select Market of the Lakeland common stock issuable in the merger, the receipt of all necessary approvals including approvals of the Federal Deposit Insurance Corporation, the New Jersey Department of Banking and Insurance and the Federal Reserve Board and other customary conditions. The Boards of Directors of Lakeland Bancorp Inc. and Somerset Hills Bancorp approved the deal on January 28, 2013. The transaction is expected to close in the second or third quarters of 2013. The transaction is expected to be accretive to Lakeland Bancorp’s earnings per share in 2014 and slightly dilutive to tangible book value with an estimated earn back prior to December 31, 2014. In addition, the transaction is expected to be immediately accretive to the TCE Ratio (tangible common equity as a percentage of tangible assets) by approximately 25 basis points. As on May 6, 2013, approval from the New Jersey Department of Banking and Insurance was received. Shareholders meeting is to be held on May 8, 2013 by both Lakeland Bancorp and Somerset Hills. Robert Schwartz of Windels Marx Lane & Mittendorf, LLP acted as legal advisor for Somerset Hills Bancorp. Peter H. Ehrenberg and Laura R. Kuntz of Lowenstein Sandler PC acted as legal advisors and AST Fund Solutions, LLC acted as transfer agent for Somerset Hills Bancorp. Raymond James Financial, Inc. (NYSE:RJF) acted as financial advisor for Lakeland Bancorp Inc. and Keefe, Bruyette, & Woods, Inc. acted as legal advisor for Somerset Hills Bancorp.
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