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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
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 2, 1997
FIRSTMERIT CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 0-10161 34-1339938
(State or other jurisdiction of (Commission (IRS employer
incorporation or organization) file number) identification number)
III CASCADE PLAZA, 7TH FLOOR AKRON, OHIO 44308 (330) 384-8000
(Address of Principal Executive Offices) (Zip Code) (Telephone Number)
Copy to:
KEVIN C. O'NEIL
BROUSE & MCDOWELL
500 First National Tower
Akron, Ohio 44308-1471
(330) 434-5207
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ITEM 5. OTHER EVENTS.
On November 2, 1997, FirstMerit Corporation ("FirstMerit"), entered
into an Agreement of Affiliation and Plan of Merger ("Agreement") with CoBancorp
Inc. ("CoBancorp"), a bank holding corporation headquartered in Elyria, Ohio,
whereby CoBancorp will merge with and into FirstMerit ("Merger"). Based on
FirstMerit's per share closing price on October 31, 1997 of $25.50, the value of
the transaction on such date was approximately $157.0 million.
The Merger is structured as a tax-free exchange for CoBancorp
shareholders receiving FirstMerit common stock, and will be accounted for as a
purchase transaction. The Merger is expected to close in the second quarter of
1998.
In connection with the Merger, FirstMerit plans to issue between 3.1
and 4.3 million shares of its common stock. The FirstMerit Board of Directors
has approved the repurchase of up to 4.3 million shares of FirstMerit stock for
use in the Merger. These share purchases may be effected through public and
private transactions.
Under the terms of the Agreement, each share of CoBancorp common stock
will be exchanged for $44.50 in cash or for shares of common stock of FirstMerit
with a market value per share of $44.50, based upon the market value of
FirstMerit common stock during a ten day period ending ten days prior to closing
of the transaction ("Pricing Period"), subject to adjustment as provided for in
the Agreement ("Average Closing Price"). CoBancorp shareholders may elect to
exchange their common stock for either common stock of FirstMerit, or $44.50 in
cash, provided that no less than 30 percent nor more than 49 percent of the
total transaction value will be paid in cash.
Each CoBancorp shareholder will have a right to elect to receive (a)
shares of FirstMerit Common Stock, (b) cash in the amount of $44.50 per share of
CoBancorp common stock, or (c) a specified amount of shares of FirstMerit Common
Stock with the balance as cash in the amount of $44.50 per share of CoBancorp
common stock. A CoBancorp shareholder can also make no election.
On the date the Agreement was executed, the "Exchange Ratio" for the
CoBancorp common stock was 1.745, based upon per share prices of CoBancorp and
FirstMerit common stock of $44.50 and $25.50, respectively. The Exchange Ratio,
however, will not be fixed until the end of the Pricing Period. If the Average
Closing Price of the FirstMerit common stock is (a) greater than $30.60, then
the Exchange Ratio will equal $48.53 divided by the Average Closing Price, (b)
equal to or greater than $28.05 but less than or equal to $30.60 per share, then
the Exchange Ratio will be 1.586, (c) greater than $22.95 but less than $28.05
per share, then the Exchange Ratio will be adjusted by multiplying the Exchange
Ratio by a factor equal to $25.50 divided by the Average Closing Price, or (d)
equal to or less than $22.95, subject to the right of CoBancorp to terminate and
of FirstMerit to "gross-up," then the Exchange Ratio will be 1.939.
If the Average Closing Price of FirstMerit common stock is less than
$20.40, CoBancorp may elect to terminate the Agreement. If CoBancorp makes such
an election, FirstMerit has the right to agree to fix and "gross up" the
Exchange Ratio at 1.939. If FirstMerit does so, CoBancorp may not terminate the
Agreement.
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The following table details the relationship between the Average
Closing Price, the Exchange Ratio and the per share value of CoBancorp common
stock, should a CoBancorp shareholder make an election to receive only
FirstMerit common stock, and assuming no prorations as discussed below.
PER SHARE VALUE TO
AVERAGE CLOSING PRICE EXCHANGE RATIO COBANCORP SHAREHOLDER
More than $30.60 Floating $48.53
$30.60 to $28.05 Fixed at 1.586
$30.60 1.586 $48.53
$30.00 1.586 $47.58
$29.00 1.586 $45.99
$28.05 1.586 $44.50
$28.04 to $22.96 Floating
$28.04 1.587 $44.50
$27.00 1.648 $44.50
$26.00 1.712 $44.50
$25.00 1.780 $44.50
$24.00 1.854 $44.50
$22.96 1.938 $44.50
Equal to or
Less Than $22.95 Fixed at 1.939
$22.95 1.939 $44.50
$22.00 1.939 $42.66
$21.00 1.939 $40.72
$20.40 1.939 $39.55
If the CoBancorp shareholders elect less than 30 percent or more than
49 percent of the total transaction value to be paid in cash, the Agreement
provides that generally shareholders will have certain of their elections
allocated on a pro rata basis so that no less than 30 percent nor more than 49
percent of the total transaction value will be paid in cash.
Consummation of the Merger is subject to certain customary conditions,
including, among others, (i) the approval of the Merger, the Agreement and the
transactions contemplated thereby by the CoBancorp shareholders at a meeting
held for such purpose, and (ii) receipt of certain regulatory approvals.
Subsequent to the execution of the Agreement, and subject to
FirstMerit's right to terminate the Agreement if not executed, the Company and
FirstMerit entered into a Stock Purchase Option dated as of November 3, 1997
(the "CoBancorp Stock Option"). Under the CoBancorp Stock Option, FirstMerit was
granted an irrevocable option to purchase up to up to 19.9% (currently being
687,311 shares without giving
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effect to the issuance of any shares subject to the CoBancorp stock option plans
and the CoBancorp Stock Option) of CoBancorp common stock, no par value at a
price equal to $40.00 per share. The number of shares and the purchase price are
subject to adjustment as described in the CoBancorp Stock Option. The CoBancorp
Stock Option is exercisable by FirstMerit only under specific circumstances
involving generally a transaction whereby CoBancorp would enter into an
agreement to merge with a party other than FirstMerit, a third party would
announce a tender offer for CoBancorp, another party shall have acquired 20% or
more of CoBancorp, or the Agreement is not approved by the CoBancorp
shareholders. Under certain circumstances CoBancorp may be required to
repurchase the CoBancorp Stock Option or the shares acquired pursuant to the
exercise thereof, plus pay additional sums.
The preceding descriptions of the Agreement and the CoBancorp Stock
Option are qualified in their entirety by reference to the copies of the
Agreement and the CoBancorp Stock Option included as Exhibits 99.1 and Exhibit
99.2 hereto, respectively, and which are hereby incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS.
99.1 Agreement of Affiliation and Plan of Merger dated
November 2, 1997 by and between FirstMerit
Corporation and CoBancorp Inc.
99.2 CoBancorp Inc. Stock Purchase Option dated
November 3, 1997
99.3 Text of Press Release dated November 3, 1997
issued by FirstMerit Corporation
SIGNATURE
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.
FIRSTMERIT CORPORATION
Dated: November 10, 1997 By: /S/ TERRY E. PATTON
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Terry E. Patton
Secretary
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FIRSTMERIT CORPORATION
CURRENT REPORT ON FORM 8-K
INDEX OF EXHIBITS
EXHIBIT
99.1 Agreement of Affiliation and Plan of Merger dated
November 2, 1997 by and between FirstMerit
Corporation and CoBancorp Inc.
99.2 CoBancorp Inc. Stock Purchase Option dated
November 3, 1997
99.3 Text of Press Release dated November 3, 1997
issued by FirstMerit Corporation
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