EXHIBIT 8.1
WARNER NORCROSS & JUDD LLP
Attorneys At Law
900 Old Kent Building
111 Lyon Street, N.W.
Grand Rapids, Michigan 49503-2489
Telephone: (616) 752-2000
Fax: (616) 752-2500
October 18, 1999
Old Kent Financial Corporation
111 Lyon Street N.W.
Grand Rapids, Michigan 49503 |
Merchants Bancorp, Inc.
1851 West Galena Blvd.
Aurora, Illinois 60506 |
You have each requested our opinion regarding the federal income tax consequences
of the proposed affiliation of Merchants Bancorp, Inc. ("Merchants") with Old Kent Financial
Corporation ("Old Kent") through the proposed merger (the "Merger") of Merchants Acquisition
Corporation ("MergerSub") into Merchants under the terms of an Agreement and Plan of Merger
dated as of July 29, 1999 (the "Merger Agreement"), among Old Kent, MergerSub and Merchants,
followed by the liquidation of Merchants. Capitalized terms not defined herein shall have the
meanings ascribed to them in the Merger Agreement.
MergerSub will be merged into Merchants under the laws of the states of Michigan
and Delaware and in accordance with the Merger Agreement. In the Merger, all of the issued and
outstanding shares of Merchants Common Stock will be converted into shares of Old Kent Common
Stock. Immediately after the Merger, Merchants will be liquidated and dissolved, and all of its
assets and liabilities will be transferred to and assumed by Old Kent. In addition, immediately
following the Merger and the liquidation and dissolution of Merchants, Old Kent intends to merge
the bank subsidiary of Merchants, Merchants National Bank of Aurora, into Old Kent's bank
subsidiary, Old Kent Bank.
This opinion is based upon facts regarding the Merger as described in the Prospectus
and Proxy Statement contained in the Registration Statement, and on the following assumptions:
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1. The fair market value of the Old Kent Common Stock to be received by each
Merchants stockholder will be approximately equal to the fair market value of the Merchants
Common Stock surrendered in the exchange. |
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2. Old Kent has no plan or intention to reacquire any of the Old Kent Common
Stock issued in the transaction, other than purchases of stock in the open market in the
normal course of business executed through an independent broker in which Old Kent is not |
WARNER NORCROSS & JUDD LLP
Old Kent Financial Corporation
Merchants Bancorp, Inc.
October 18, 1999
Page 2
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aware of the identity of any seller. Old Kent did not create and has not modified its stock
repurchase program in connection with the acquisition of Merchants. |
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3. Old Kent will acquire at least 90% of the fair market value of the net assets
and at least 70% of the fair market value of the gross assets held by Merchants immediately
prior to the transaction. For purposes of this assumption, amounts used by Merchants to pay
its reorganization expenses, amounts paid by Merchants to shareholders who receive cash
or other property and all redemptions and distributions (except for regular, normal dividends)
made by Merchants immediately preceding the transaction will be included as assets of
Merchants held immediately prior to the transaction. |
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4. Old Kent will acquire solely for voting stock property of Merchants having
a fair market value which is at least 80% of the fair market value of all of the property of
Merchants. |
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5. Old Kent has formed MergerSub solely for the purpose of the acquisition
transaction. MergerSub will not engage in any business other than as necessary incident to
its merger into Merchants. |
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6. Immediately after the Merger, Old Kent will liquidate and dissolve Merchants
as part of an overall plan for Old Kent to acquire the assets of Merchants. |
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7. Old Kent has no plan or intention to sell or otherwise dispose of any of the
assets of Merchants acquired in the transaction, except for dispositions made in the ordinary
course of business or transfers described in Section 368(a)(2)(C) of the Internal Revenue
Code of 1986, as amended (the "Code"). |
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8. The liabilities of Merchants to be assumed by Old Kent and the liabilities to
which the assets of Merchants to be transferred are subject were incurred by Merchants in
the ordinary course of its business. |
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9. Following the transaction, Old Kent will continue the historic business of
Merchants or use a significant portion of Merchants' historic business assets in a business. |
WARNER NORCROSS & JUDD LLP
Old Kent Financial Corporation
Merchants Bancorp, Inc.
October 18, 1999
Page 3
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10. Each of Old Kent, Merchants, and the stockholders of Merchants will pay
their respective expenses, if any, incurred in connection with the transaction. |
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11. There is no intercorporate indebtedness existing between Old Kent and
Merchants that was issued, acquired, or will be settled at a discount. |
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12. No party to the transaction is an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code. |
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13. Old Kent does not own, nor has it owned during the past five years, any
shares of the stock of Merchants. |
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14. On the date of the transaction, the fair market value of the assets of Merchants
will exceed the sum of its liabilities, if any, to which the assets are subject. |
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15. Merchants is not under the jurisdiction of a court in a Title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the Code. |
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16. None of the compensation or other payments received by any stockholder-employees of Merchants will be separate consideration for or
allocable to, any of their shares
of Merchants Common Stock; none of the shares of Old Kent Common Stock received by
any stockholder-employees of Merchants will be separate consideration for, or allocable to,
any employment agreement; and the compensation paid to any stockholder-employees will
be for services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services. |
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17. The payment of cash to Merchants stockholders in lieu of fractional shares
of Old Kent Common Stock will not be separately bargained for consideration, but will be
undertaken solely for the purpose of avoiding the expense and inconvenience of issuing and
transferring fractional shares. |
Based on the facts and assumptions set forth above, and subject to the limitations and
conditions identified in this opinion, it is our opinion that the Merger of MergerSub into Merchants
will be disregarded and the acquisition of the stock of Merchants and its liquidation by Old Kent will
be treated for federal income tax purposes as the acquisition by Old Kent of substantially all of the
WARNER NORCROSS & JUDD LLP
Old Kent Financial Corporation
Merchants Bancorp, Inc.
October 18, 1999
Page 4
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assets of Merchants in exchange for Old Kent Common Stock and the assumption by Old Kent of
the liabilities of Merchants followed by a distribution from Merchants to its stockholders of the Old
Kent Common Stock in exchange for their Merchants stock in a transaction qualifying as a
reorganization under Section 368(a)(1)(C) of the Code. Merchants and Old Kent will each be "a
party to a reorganization" within the meaning of Section 368(b). In addition: |
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1. No gain or loss will be recognized by Old Kent upon the receipt by Old Kent
of the assets of Merchants in exchange for the Old Kent Common Stock and the assumption
by Old Kent of the liabilities of Merchants. |
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2. The basis of the assets of Merchants to be received by Old Kent will be the
same as the basis of those assets in the hands of Merchants immediately prior to the Merger. |
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3. Merchants will not recognize any gain or loss on the transfer of its assets to
Old Kent in exchange for Old Kent Common Stock. |
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4. The holding period of the assets of Merchants to be received by Old Kent will
include the holding period of those assets in the hands of Merchants. |
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5. No gain or loss will be recognized by the stockholders of Merchants who
receive shares of Old Kent Common Stock in exchange for all of their shares of Merchants
Common Stock, except to the extent of any cash received in lieu of a fractional share of Old
Kent Common Stock. |
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6. The basis of the Old Kent Common Stock (including fractional share
interests) to be received by stockholders of Merchants will, in each instance, be the same as
the basis of the respective shares of Merchants Common Stock surrendered in exchange
therefor. |
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7. The holding period of the Old Kent Common Stock to be received by
stockholders of Merchants will, in each instance, include the period during which the
Merchants Common Stock surrendered in exchange therefor was held, provided that the
Merchants Common Stock was, in each instance, held as a capital asset in the hands of the
stockholders of Merchants at the date of the exchange. |
WARNER NORCROSS & JUDD LLP
Old Kent Financial Corporation
Merchants Bancorp, Inc.
October 18, 1999
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We express no opinion about the tax treatment of the transaction under other
provisions of the Code and regulations or about the tax treatment of any conditions existing at the
time of, or the effects resulting from, the Merger that are not specifically covered above.
We consent to the filing of this opinion as an exhibit to the Registration Statement
and to the references to our firm in the Registration Statement.
This opinion is rendered for the purposes of Item 21 of Form S-4 and Item 601 of
Regulation S-K, may be relied upon only by you and the Commission and may not be used, quoted
or referred to or filed for any other purpose without our prior written permission.
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WARNER NORCROSS & JUDD LLP
By /s/ Stephen R. Kretschman
Stephen R. Kretschman, a Partner |
