First Capital has agreed to acquire First Bancorp of Indiana in an all-stock transaction that will combine their banking subsidiaries. First Bancorp will merge into First Capital, and First Federal Savings Bank will merge into First Harrison Bank, which will remain the surviving bank.
The deal has been approved by both companies’ boards, but still requires a vote by First Bancorp shareholders and regulatory and other approvals.
Key details
- Exchange ratio: First Bancorp shareholders will receive 0.3075 shares of First Capital common stock for each First Bancorp share they own. The ratio is fixed, so the value of the stock consideration will rise or fall with First Capital’s share price.
- Estimated value: Using First Capital’s 20-day volume-weighted average share price of $63.05 on Nov. 4, the stock consideration was valued at about $33.2 million. That estimate will change as First Capital’s share price moves.
- Fractional shares: No fractional First Capital shares will be issued. Shareholders otherwise entitled to a fraction will receive cash for it.
- Debt assumed: First Capital will take on First Bancorp’s outstanding debt, including $12 million of subordinated notes due in 2032 and 2037, and about $5 million of junior subordinated debentures due in 2037 related to trust preferred securities.
- Conditions to closing: The transaction requires First Bancorp shareholder approval, regulatory approvals, an effective registration statement for the First Capital shares to be issued, and Nasdaq authorization to list those shares. Other customary conditions also apply, including each company meeting its contractual obligations.
- First Bancorp’s deal commitments: Its board is to recommend that shareholders approve the merger and solicit votes in favor, subject to certain exceptions. First Bancorp has also agreed, with exceptions, not to seek or negotiate competing business-combination proposals.
- Termination fee: First Bancorp could owe First Capital a $1.4 million fee in specified circumstances, including if it ends the agreement to pursue a superior proposal or its board changes its recommendation in connection with such a proposal.
What changes
If completed, First Capital will be the parent company of the combined organization, and First Harrison Bank will be the surviving bank. First Bancorp shareholders will become First Capital shareholders, while First Capital will also assume First Bancorp’s roughly $17 million of specified debt. The disclosed $33.2 million estimate is the value of the stock consideration, not a cash purchase price.