On September 25, 2020, First Mid Bancshares, Inc. (the "First Mid") and Eval Sub Inc., a newly formed Missouri corporation and wholly-owned subsidiary of First Mid ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with LINCO Bancshares, Inc., a Missouri corporation ("LINCO"), and the sellers as defined therein, pursuant to which, among other things, First Mid agreed to acquire 100% of the issued and outstanding shares of LINCO pursuant to a business combination whereby Merger Sub will merge with and into LINCO, whereupon the separate corporate existence of Merger Sub will cease and LINCO will continue as the surviving company and a wholly-owned subsidiary of First Mid (the "Merger").
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $1.00 per share, of LINCO issued and outstanding immediately prior to the effective time of the Merger (other than shares held in treasury by LINCO) will be converted into and become the right to receive, cash or shares of common stock, par value $4.00 per share, of First Mid and cash in lieu of fractional shares, less any applicable taxes required to be withheld, and subject to certain potential adjustments. On an aggregate basis, the total consideration payable by First Mid at the closing of the Merger is $116.5 million in cash and 1,262,246 shares of First Mid common stock, provided that the shareholders of LINCO have collectively elected pursuant to the Merger Agreement to receive varying amounts of cash or shares of common stock of First Mid as consideration in the Merger. In addition, immediately prior to the closing of the proposed merger, LINCO will pay a special dividend to its shareholders in the aggregate amount of $13 million.
It is anticipated that LINCO's wholly-owned bank subsidiary, Providence Bank ("Providence Bank"), will be merged with and into First Mid's wholly-owned bank subsidiary First Mid-Illinois Bank & Trust, N.A. ("First Mid Bank") at a date following completion of the Merger. At the time of the bank merger, Providence Bank's banking offices will become branches of First Mid Bank. As of June 30, 2020, Providence Bank had total consolidated assets of approximately $1.2 billion, loans of approximately $911 million and total deposits of approximately $908 million.
The Merger Agreement contains customary representations and warranties of both parties and customary conditions to the parties' obligations to close the transaction, as well as agreements to cooperate in the process of consummating the transaction. The Merger Agreement also contains provisions limiting the activities of LINCO and Providence Bank which are outside of the usual course of business, including restrictions on employee compensation, certain acquisitions and dispositions of assets and liabilities, and solicitations relating to alternative acquisition proposals, pending completion of the Merger.
The Merger is anticipated to be completed in the first quarter of 2021, and is subject to the satisfaction of customary closing conditions in the Merger Agreement, the approval of the appropriate regulatory authorities, and the receipt of a written consent of the shareholders of LINCO approving the Merger within one business day of the entry into the Merger Agreement. Such written consent has been received by the Company.
The information set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for purposes of, and were and are solely for the benefit of, the contracting parties, and are qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time and investors should not rely on them as statements of fact. In addition, such representations and warranties (i) will not survive the consummation of the Merger and (ii) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties' public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger Agreement and not to provide investors with any other factual information regarding First Mid or LINCO, their respective affiliates or their respective businesses. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding First Mid, LINCO, their respective affiliates or their respective businesses, the Merger Agreement and the Merger that will be contained in, or incorporated by reference into the documents that First Mid will file with the Securities Exchange Commission ("SEC"), including in the Forms 10-K, Forms 10-Q and other documents that First Mid files with or furnishes to the SEC.
