Cape May Courthouse-based Cape Bancorp, Inc., the holding company for Cape Bank, and Vineland-based Colonial Financial Services, Inc., the holding company for Colonial Bank, FSB (“Colonial Bank”), jointly announce they have entered into an agreement and plan of merger under which each shareholder of Colonial, subject to potential adjustments at closing, will be entitled to elect to receive either $14.50 per share in cash or 1.412 shares of Cape’s common stock, subject to 50 percent of the shares being exchanged for stock and 50 percent for cash. Based on Cape’s stock price of $10.06, as of September 9, 2014, the transaction is valued at approximately $55.0 million. The merger is expected to qualify as a tax-free reorganization for those shareholders electing to receive Cape stock. The transaction is subject to receipt of Colonial shareholder approval, Cape shareholder approval and customary regulatory approvals. The transaction is expected to close in the first half of 2015.
Upon consummation of the transaction, Colonial Bank will be merged with and into Cape Bank. At that time, Colonial Bank branches will become branches of Cape Bank. Cape estimates that, following the closing, it will have approximately $1.6 billion in assets and 22 banking locations throughout New Jersey. Cape expects the transaction to be accretive to earnings per share in the first full year of operations, excluding any one-time restructuring charges, and that Cape Bank will exceed “well-capitalized” thresholds under all regulatory definitions.
At closing, two current members of the Colonial Board of Directors, Mr. Gergory J. Facemyer and Hugh J. McCaffrey will be added to the Boards of Directors of Cape and Cape Bank.
Michael D. Devlin, President and CEO of Cape, stated, “We are very pleased to announce the merger with Colonial Financial Services, which is expected to increase the size of our organization nearly 50% to $1.6 billion in assets. Colonial has strong market share in its core markets and provides an attractive low cost funding base for our franchise.
“This transaction helps Cape Bank achieve additional operating scale and drive earnings per share growth as our management team continues to focus on achieving above-average returns for our shareholders. In addition to the financial benefits, Colonial will augment the westward expansion that we began in 2011 with the opening of our Burlington County, New Jersey market development office and in 2013 with the opening of our Radnor, Pennsylvania market development office.”
Gregory J. Facemyer, Colonial’s Chairman, commented, “We are excited to partner with a strong and reputable firm, such as Cape, and believe that this transaction will benefit the shareholders of both companies.
In addition, from a community and customer stand point, our combined financial institution will offer a wider array of products and services while continuing our long-standing personal commitment to our customers and community. ”
Sterne, Agee & Leach, Inc. is serving as financial advisor to Cape and Luse Gorman Pomerenk & Schick, P.C. is serving as legal counsel to Cape on the transaction. Keefe, Bruyette & Woods, a Stifel Company, is serving as financial advisor and rendered a fairness opinion to Colonial. FinPro Capital Advisors, Inc. rendered a fairness opinion in connection with the transaction to Colonial and the law firm of Windels Marx Lane & Mittendorf is serving as legal counsel to Colonial on the transaction.Related Articles: