Old National Bancorp, based in Evansville, on Tuesday announced that it would acquire Fort Wayne-based Tower Financial Corporation through a cash and stock offer valued at more than $100 million.
Tower Bank has seven banking centers in Fort Wayne and another in Warsaw. Old National has 176 branches. Old National’s assets similarly dwarf Tower’s. Old National reports that it has $9.6 billion in assets, compared with $680.9 million in total assets, with an additional $523.3 million in trust assets under management, for Tower Financial Corporation is an Indiana bank holding company. (Tower Bank & Trust Company is its wholly-owned subsidiary.)
Picking up Tower will make Old National the third-largest deposit holder in Indiana, Old National said Tuesday. Old National also has branches in southern Illinois, western Kentucky and Louisville, and southwestern Michigan.
In a press release announcing the acquisition, Michael Cahill, Tower Financial Corporation President and CEO, said, “We have similar missions and share many of the same corporate values. Our Tower team looks forward to becoming a key part of the Old National organization and continuing our role in our local market.”
Under the terms of the merger agreement, unanimously approved by the boards of both companies, shareholders of Tower Financial Corporation will receive 1.20 shares of Old National Bancorp common stock and $6.75 in cash (fixed) for each share of Tower Financial common stock. Based upon last Thursday’s closing price of $13.52 per share of Old National common stock, the transaction is valued at approximately $107.7 million. The transaction value is likely to change due to fluctuations in the price of Old National common stock. As provided in the merger agreement, the exchange ratio is subject to adjustment (calculated prior to closing) in the event shareholders’ equity of Tower Financial Corporation is below a specified amount.
The transaction is expected to close in the first quarter of 2014. The transaction remains subject to approval by federal and state regulatory authorities and Tower Financial Corporation shareholders as well as the satisfaction of other closing conditions provided in the merger agreement. The merger agreement also provides that Tower Bank, the bank subsidiary of Tower Financial Corporation, will be merged into Old National Bank, the bank subsidiary of Old National Bancorp.