German American Bancorp, Inc. (Nasdaq: GABC) (“German American”) and Heartland BancCorp (OTCQX: HLAN) (“Heartland”) jointly announced today that they have entered into a definitive agreement to merge Heartland into German American. Upon completion of the transaction, Heartland’s subsidiary bank, Heartland Bank, will be merged into German American’s subsidiary bank, German American Bank, and operate under a co-branded name within the Ohio markets.
Under the terms of the definitive agreement, Heartland shareholders, other than the Heartland retirement plan, will receive 3.90 shares of German American common stock for each share of Heartland common stock in an all-stock, tax-free exchange. The shares held by the Heartland retirement plan will be exchanged for an equivalent cash payment. Based on the number of Heartland common shares expected to be outstanding at closing, German American would issue approximately 7.66 million shares of its common stock. With a $39.84 per share volume-weighted average price for German American common stock over the 10-day trading period ended July 26, 2024, the indicated per share value to Heartland shareholders is $155.37 and the aggregate transaction value, inclusive of cash payments for in-the-money options and in exchange for Heartland shares held through the Heartland retirement plan would be approximately $330.2 million.
As of June 30, 2024, Heartland operated 20 full-service banking offices and had approximately $1.9 billion of total assets, $1.5 billion of total loans and $1.6 billion of total deposits. Giving effect to the merger today, the combined organization will have more than $8.1 billion in assets and a branch network of almost 95 rural, suburban and urban locations across Southern Indiana, Central and Northern Kentucky and Central and Southwest Ohio.
“This strategic partnership will bring together two high-performing, community-oriented organizations and expand German American’s footprint into Columbus and Cincinnati, Ohio, two of the most vibrant and fastest-growing markets in the Midwest,” stated D. Neil Dauby, Chairman and CEO of German American. “We share the same culture and commitment to serving our customers and our communities with a relationship-based approach. We are excited to welcome Heartland’s customers, employees, communities and shareholders to the German American family.”
Dauby continued, “We expect this strategic transaction will be materially accretive to German American’s earnings per share during the twelve months following completion of the transaction with a relatively quick tangible book value earn back period. German American’s pro forma capital ratios will continue to significantly exceed regulatory well-capitalized levels providing ongoing financial strength and future growth opportunities.”
G. Scott McComb, Chairman, President and CEO of Heartland stated, “This strategic partnership allows us to partner with another like-minded, larger community bank that enables us to continue our strong brand and growth trajectory within the markets we serve. It will also allow us to deepen and broaden our current and prospective customer relationships with enhanced financial service offerings. Strategically and culturally, Heartland and German American are exceptionally well-aligned with a strong commitment to the community banking business model. That model, centered on delivering the exceptional customer experience and willingness to invest in local communities that Ohio has come to know and love from Heartland, will propel our future success.”
McComb is expected to join the German American and German American Bank boards of directors while members of the Heartland executive and senior teams are expected to stay on as regional management to provide local leadership and decision making.
In addition to Scott McComb, Ronnie Stokes, a current Heartland board member, is also expected to join the German American and German American Bank boards of directors.
The all-stock transaction has been unanimously approved by each company’s board of directors and is expected to close in the first quarter of 2025, subject to regulatory approval, approval by both German American and Heartland shareholders and completion of other customary closing conditions.
Keefe, Bruyette & Woods, Inc., A Stifel Company served as financial advisor on the transaction to German American and Dentons Bingham Greenebaum LLP served as legal counsel.
Raymond James & Associates, Inc. served as the financial advisor on the transaction to Heartland and Hunton Andrews Kurth LLP served as legal counsel.
A slide presentation relating to the transaction can be accessed under the investor relations section of German American’s website at www.germanamerican.com and Heartland Bank’s website at www.heartland.bank. In addition, the presentation is included as an exhibit to the Form 8-K filed with the Securities and Exchange Commission announcing the transaction.
