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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
September 18, 1997
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Date of Report (Date of Earliest event reported)
ML Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania
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(State or other jurisdiction of incorporation)
0-24358
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(Commission File Number)
23-2752439
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(IRS Employer Identification No.)
Two Aldwyn Center
Lancaster Avenue & Route 320
Villanova, Pennsylvania 19085
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(Address of principal executive offices)
(610) 526-6200
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Registrant's telephone number, including area code
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ITEM 5. OTHER EVENTS.
On September 18, 1997, ML Bancorp, Inc. ("ML") and Sovereign Bancorp
("Sovereign") entered into an Agreement and Plan of Merger (the "Agreement")
which sets forth the terms and conditions under which ML will be merged with
and into Sovereign (the "Merger"). On the same date, Main Line Bank, a
wholly-owned subsidiary of ML, and Sovereign Bank, a wholly-owned subsidiary of
Sovereign, entered into an Agreement and Plan of Merger which sets forth the
terms and conditions under which Main Line Bank will be merged with and into
Sovereign Bank (the "Bank Merger") following consummation of the Merger.
In accordance with the terms of the Agreement, each outstanding share
of ML common stock, par value $.01 per share (the "ML Common Stock"),
outstanding immediately prior to the effective date of the Merger (the
"Effective Date"), other than any shares held by holders who exercise
dissenters' rights under the Pennsylvania Business Corporation Law or as
otherwise provided in the Agreement, will be converted into the right to
receive a number of shares of Sovereign common stock, no par value per share
(the "Sovereign Common Stock"), based on an exchange ratio (the "Exchange
Ratio") which generally is determined based on the average of the closing high
bid and low asked prices of a share of Sovereign Common Stock for each of the
20 consecutive trading days ending on the trading day preceding the
Determination Date (the "Sovereign Market Value"). The Determination Date is
defined in the Agreement to be the earlier of (i) the date on which the Office
of Thrift Supervision ("OTS") approves the Merger and the Bank Merger (or the
later of such dates if the OTS approves such transactions on different dates)
and (ii) March 31, 1998. Pursuant to the Agreement, (i) if the Sovereign
Market Value is greater than or equal to $13.80 and less than or equal to
$18.67, the Exchange Ratio shall be 1.67, (ii) if the Sovereign Market Value is
less than $13.80, the Exchange Ratio shall be equal to the quotient (rounded to
the nearest hundredth) determined by dividing $23.05 by the Sovereign Market
Value, provided that if the Sovereign Market Value is less than $12.18,
Sovereign shall have the right to elect to have the Exchange Ratio be equal to
the quotient determined by dividing $23.05 by $12.18, subject to ML's right to
terminate the Agreement under such circumstances and Sovereign's right to
eliminate such right of termination, as discussed below, and (iii) if the
Sovereign Market Value is greater than $18.67, the Exchange Ratio shall be
equal to the quotient (rounded to the nearest hundredth) determined by dividing
$31.18 by the Sovereign Market Value, provided that if on or before the
Effective Date there has been any public announcement of a proposed acquisition
or sale of all or substantially all of Sovereign's assets or a merger,
consolidation or similar transaction involving Sovereign in which Sovereign is
not the surviving entity or in which shareholders of Sovereign before such
transaction will not hold in the aggregate shares of the surviving or new
corporation to be outstanding immediately after the consummation thereof
entitled to cast at least a majority of the votes entitled to be cast generally
for the election of directors, the Exchange Ratio shall be 1.67.
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Each holder of ML Common Stock who would otherwise be entitled to
receive a fraction of a share of Sovereign Common Stock (after taking into
account all of a shareholder's certificates) will receive cash, in lieu
thereof, without interest, based on the price of a share of the Sovereign
Common Stock on the Effective Date.
The Agreement may be terminated by ML by giving notice to Sovereign at
any time during the ten-day period following the Determination Date if both (i)
the Sovereign Market Value shall be less than $12.18 and Sovereign shall have
made the election specified in the proviso clause in clause (ii) of the third
sentence in the second preceding paragraph and (ii) (x) the quotient obtained
by dividing the Sovereign Market Value by $16.24 shall be less than (y) the
quotient obtained by dividing the weighted average of the closing sales prices
of the common stocks of a specified index of thrift and bank holding companies
on the Determination Date by the weighted average of such closing prices on
September 17, 1997, and subtracting 0.10. In the event that ML gives Sovereign
notice of its intent to terminate the Agreement pursuant to the conditions set
forth in the preceding sentence, Sovereign may determine, in its sole
discretion, to eliminate ML's right to terminate the Agreement by increasing
the Exchange Ratio to equal the quotient (rounded to the nearest hundredth)
determined by dividing $23.05 by the Sovereign Market Value.
The Merger Agreement also provides that each option to purchase shares
of ML Common Stock under ML's stock option plans which is outstanding on the
Effective Date, whether or not exercisable, shall be converted into and become
a right to purchase shares of Sovereign Common Stock in accordance with the
terms of the ML stock option plan and ML option agreement by which it is
evidenced, except that from and after the Effective Date, (i) the number of
shares of Sovereign Common Stock subject to each ML option shall be equal to
the number of shares of ML Common Stock subject to such option prior to the
Effective Date multiplied by the Exchange Ratio (with fractional shares rounded
down to the nearest share) and (ii) the exercise price per share of Sovereign
Common Stock purchasable thereunder shall be that specified in the ML option
divided by the Exchange Ratio (rounded up to the nearest cent).
The Merger is intended to constitute a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended, and to be accounted
for as a pooling-of-interests under generally accepted accounting principles.
It is contemplated that ML will issue prior to the Effective Date a sufficient
number of shares of ML Common Stock so that the Merger will be accounted for in
the desired manner.
Consummation of the Merger is subject to various conditions, including
(i) receipt of the requisite approval of the Agreement by the shareholders of
each of ML and Sovereign, (ii) receipt of requisite regulatory approvals from
the OTS and any other applicable regulatory authority, (iii) receipt of
opinions from the parties' respective legal counsel as to the tax treatment of
certain aspects of the Merger, (iv) receipt of letters from the parties'
respective independent public accountants to the effect that the Merger shall
be accounted for as a pooling-of-interests and (v) satisfaction of certain
other conditions.
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Upon consummation of the Bank Merger, Dennis S. Marlo, President and
Chief Executive Officer of ML and Main Line Bank, will be elected as President
of the Pennsylvania Division of Sovereign Bank, which shall consist of
Sovereign Bank's Pennsylvania and Delaware branch network.
In connection with the Agreement, the directors and executive officers
of ML entered into a letter agreement with Sovereign pursuant to which each
such person agreed in his personal capacity to vote the shares of ML Common
Stock beneficially owned by him in favor of the Agreement at the meeting of ML
shareholders called for the purpose of considering the same and to not transfer
such shares of ML Common Stock or shares of Sovereign Common Stock acquired
upon consummation of the Merger or otherwise during specified periods, and the
directors and executive officers of Sovereign entered into a similar letter
agreement with ML with respect to the shares of Sovereign Common Stock
beneficially owned by them.
In connection with the Agreement, ML and Sovereign entered into a
Stock Option Agreement, dated as of September 18, 1997 (the "Option
Agreement"), pursuant to which ML granted to Sovereign an option to purchase,
under certain circumstances, up to 2,361,245 shares of ML Common Stock
(representing 19.9% of the currently outstanding shares of ML Common Stock) at
a price of $21.875 per share (the "Option"). Under certain circumstances, ML
may be required to repurchase the Option or the shares acquired pursuant to the
exercise thereof. The Option Agreement was entered into by ML as a condition
to Sovereign's willingness to enter into the Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibits are filed herewith.
Exhibit No. Description of Exhibit
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2.0 Agreement and Plan of Merger, dated as of September
18, 1997, between Sovereign Bancorp and ML Bancorp,
Inc.
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Exhibit No. Description of Exhibit
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10.1 Form of Letter Agreement, dated as of September 18,
1997, between Sovereign Bancorp and directors and
executive officers of ML Bancorp, Inc. (included as
Exhibit 1-A to the Agreement and Plan of Merger).
10.2 Form of Letter Agreement, dated as of September 18,
1997, between ML Bancorp, Inc. and directors and
executive officers of Sovereign Bancorp (included as
Exhibit 1-B to the Agreement and Plan of Merger).
10.3 Form of Stock Option Agreement, dated as of
September 18, 1997, between Sovereign Bancorp and ML
Bancorp, Inc. (included as Exhibit 2 to the
Agreement and Plan of Merger).
99.1 Text of joint press release, dated September 18,
1997, issued by ML Bancorp, Inc. and Sovereign
Bancorp.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ML BANCORP, INC.
By:/s/ Brian M. Hartline
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Name: Brian M. Hartline
Title: Senior Vice President, Chief Financial
Officer, Secretary and Treasurer
(principal financial officer)
Date: September 24, 1997
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