Item 1.01 Entry into a Material Definitive Agreement
On February 22, 2023, LINKBANCORP, Inc., a Pennsylvania corporation ("LINK"),
and Partners Bancorp, a Maryland corporation ("Partners"), entered into an
Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement
provides that, upon the terms and subject to the conditions set forth therein,
Partners will merge with and into LINK, with LINK as the surviving entity (the
"Merger"). The Merger Agreement further provides that immediately following the
Merger, The Bank of Delmarva, a Delaware chartered bank and a wholly-owned
subsidiary of Partners ("TBOD"), will merge with and into LINKBANK, a
Pennsylvania chartered bank and a wholly-owned Subsidiary of LINK, with LINKBANK
as the surviving bank (the "TBOD Bank Merger"). The Merger Agreement also
provides that immediately following the TBOD Bank Merger, Virginia Partners
Bank, a Virginia chartered bank and a wholly-owned subsidiary of Partners
("VPB"), will merge with and into LINKBANK, with LINKBANK as the surviving bank
(the "VPB Bank Merger" and, together with the Merger and the TBOD Bank Merger,
the "Transaction"). The Merger Agreement was unanimously approved by the board
of directors of each of LINK and Partners.
Merger Consideration
Upon the terms and subject to the conditions of the Merger Agreement, at the
effective time of the Merger (the "Effective Time"), each share of common stock,
par value $0.01 per share, of Partners ("Partners Common Stock") outstanding
immediately prior to the Effective Time, other than certain shares held by
Partners or LINK, will be converted into the right to receive 1.150 of shares
(the "Exchange Ratio") of common stock, par value $0.01 per share, of LINK
("LINK Common Stock"). Holders of Partners Common Stock will receive cash in
lieu of fractional shares.
The Merger is intended to be a tax-free reorganization under Section 368(a) of
the Internal Revenue Code.
Treatment of Partners' Equity Awards
Upon the terms and subject to the conditions of the Merger Agreement, at the
Effective Time, (i) each option to purchase shares of Partners Common Stock
under the Partners Bancorp 2021 Incentive Stock Plan, Virginia Partners Bank
2015 Incentive Stock Option Plan, Delmar Bancorp 2014 Stock Plan, Virginia
Partners Bank 2008 Incentive Stock Option Plan, Liberty Bell Bank 2004 Incentive
Stock Option Plan and Liberty Bell Bank 2004 Non-Qualified Stock Option Plan
(the "Partners Stock Plans") outstanding immediately prior to the Effective Time
will be converted into an option to purchase a certain number of shares of LINK
Common Stock and (ii) each outstanding share of Partners Common Stock subject to
a restricted stock award under the Partners Stock Plans prior to the date of the
Merger Agreement, whether vested or unvested, will be cancelled and converted
automatically into the right to receive the Merger Consideration.
Certain Governance Matters
The Merger Agreement provides that, prior to the Effective Time, LINK will take
all actions necessary to adopt certain amendments to the bylaws of LINK (the
"LINK Bylaws Amendment") regarding governance matters. Effective as of the
Effective Time, and in accordance with the LINK Bylaws Amendment, the number of
directors that will comprise the full boards of directors of LINK and LINKBANK
will be 22, of which (i) twelve will be directors of LINK immediately prior to
the Effective Time (the "LINK Continuing Directors") and (ii) ten will be
directors of Partners immediately prior to the Effective Time ("Partners
Continuing Directors"). In addition, all 22 directors will be appointed to the
board of directors of the surviving corporation for terms to expire at LINK's
next annual meeting of shareholders and will be nominated to serve for two
terms. For two years, any vacancies in LINK Continuing Directors will be
generally filled by the remaining LINK Continuing Directors and any vacancies in
Partners Continuing Directors will be generally filled by the remaining Partners
Continuing Directors. The current Chairman of Partners will become the Vice
Chairman of the surviving corporation and surviving bank upon completion of the
Merger and will become the Chairman of the surviving corporation and surviving
bank in September 2024 (or such earlier date as of which the current Chairman
ceases for any reason to serve as Chairman of the surviving corporation or
surviving bank). The LINK Bylaws Amendment may be amended or waived by the
approval of at least eighty percent (80%) of the members of the surviving
corporation's board of directors then in office. The Merger Agreement provides
that, following the Transaction, the headquarters of the surviving corporation
and the surviving bank will remain located in Camp Hill, Pennsylvania and the
name of the surviving corporation and the surviving bank will remain
LINKBANCORP, Inc. and LINKBANK, respectively.
In connection with the Merger Agreement, LINK and LINKBANK have entered into
employment agreements with the following executive officers of Partners: John W.
Breda, President and Chief Executive Officer of Partners; Adam G. Nalls,
Executive Vice President and Chief Operating Officer of VPB; David A. Talebian,
President of VPB; and Wallace N. King, Sr., Executive Vice President and Chief
Lending Officer of VPB. The employment agreements become effective contingent
upon the completion of the Transaction.
Certain Other Terms and Conditions of the Merger Agreement
The Merger Agreement contains customary representations and warranties from both
LINK and Partners, and each party has agreed to customary covenants, including,
among others, covenants relating to (i) the conduct of its business during the
interim period between the execution of the Merger Agreement and the Effective
Time, (ii) in the case of LINK, its obligation to call a meeting of its
shareholders to approve the Merger Agreement and the amendment to the LINK
articles of incorporation to increase the number of authorized shares of LINK
Common Stock ("Charter Amendment"), subject to certain exceptions, the
obligation of its board of directors to recommend that its shareholders approve
the Merger Agreement and the Charter Amendment, (iii) in the case of Partners,
its obligation to call a meeting of its shareholders to approve the Merger
Agreement, and, subject to certain exceptions, the obligation of its board of
directors to recommend that its shareholders approve the Merger Agreement, and
(iv) each party's non-solicitation obligations related to alternative
acquisition proposals. LINK and Partners have also agreed to use their
reasonable best efforts to prepare and file all applications, notices and other
documents to obtain all necessary consents and approvals for consummation of the
transactions contemplated by the Merger Agreement.
The completion of the Merger is subject to customary conditions, including
(i) approval of the Merger Agreement by the requisite vote of the Partners
shareholders, (ii) approval of the Merger Agreement and Charter Amendment by the
requisite vote of the LINK shareholders, (iii) authorization for listing on
NASDAQ of the shares of LINK Common Stock to be issued in the Merger, subject to
official notice of issuance, (iv) receipt of required regulatory approvals,
. . .
Item 7.01 Regulation FD Disclosure
In connection with the announcement of the Merger Agreement, LINK and Partners
intend to provide supplemental information regarding the proposed transaction in
connection with a presentation to analysts and investors. A copy of the investor
presentation is attached hereto as Exhibit 99.3 and is incorporated herein by
reference.
The information in this Item 7.01 and Exhibit 99.3 is being furnished and shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933 or the Exchange Act, except as expressly set forth in
such filing.
Item 8.01 Other Events
On February 22, 2023, LINK and Partners issued a joint press release announcing
the execution of the Merger Agreement. A copy of the press release is filed as
Exhibit 99.4 hereto and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. None.
(b) Pro forma financial information. None.
(c) Shell company transactions: None.
(d) Exhibits.
Number Description
2.1 Agreement and Plan of Merger, dated as of February 22, 2023, by and
between LINKBANCORP, Inc. and Partners Bancorp.*
99.1 Form of Partners Bancorp Voting and Support Agreement, dated as of
February 22, 2023, by and among LINKBANCORP, Inc. and certain
shareholders of Partners Bancorp
99.2 Form of LINKBANCORP, Inc. Voting and Support Agreement, dated as of
February 22, 2023, by and among Partners Bancorp and certain
shareholders of LINKBANCORP, Inc.
99.3 Investor Presentation
99.4 Joint Press Release, dated February 22, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* The schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. Partners Bancorp agrees to furnish a copy of such schedules and
exhibits, or any section thereof, to the SEC upon request.
Forward-Looking Statements
This Current Report on Form 8-K includes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, with respect to the beliefs, goals,
intentions, and expectations of LINK and Partners regarding the proposed
transaction, revenues, earnings, earnings per share, loan production, asset
quality, and capital levels, among other matters; our estimates of future costs
and benefits of the actions we may take; our assessments of probable losses on
loans; our assessments of interest rate and other market risks; our ability to
achieve our financial and other strategic goals; the expected timing of
completion of the proposed transaction; the expected cost savings, synergies and
other anticipated benefits from the proposed transaction; and other statements
that are not historical facts.
Forward-looking statements are typically identified by such words as "believe,"
"expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project,"
"should," and other similar words and expressions, and are subject to numerous
assumptions, risks, and uncertainties, which change over time. These
forward-looking statements include, without limitation, those relating to the
terms, timing and closing of the proposed transaction.
Additionally, forward-looking statements speak only as of the date they are
made; LINK and Partners do not assume any duty, and do not undertake, to update
such forward-looking statements, whether written or oral, that may be made from
time to time, whether as a result of new information, future events, or
otherwise. Furthermore, because forward-looking statements are subject to
assumptions and uncertainties, actual results or future events could differ,
possibly materially, from those indicated in such forward-looking statements as
a result of a variety of factors, many of which are beyond the control of LINK
and Partners. Such statements are based upon the current beliefs and
expectations of the management of LINK and Partners and are subject to
significant risks and uncertainties outside of the control of the parties.
Caution should be exercised against placing undue reliance on forward-looking
statements. The factors that could cause actual results to differ materially
include the following: the occurrence of any event, change or other
circumstances that could give rise to the right of one or both of the parties to
terminate the definitive merger agreement between LINK and Partners; the outcome
of any legal proceedings that may be instituted against LINK or Partners; the
possibility that the proposed transaction will not close when expected or at all
because required regulatory, shareholder or other approvals are not received or
other conditions to the closing are not satisfied on a timely basis or at all,
or are obtained subject to conditions that are not anticipated (and the risk
that required regulatory approvals may result in the imposition of conditions
that could adversely affect the combined company or the expected benefits of the
proposed transaction); the ability of LINK and Partners to meet expectations
regarding the timing, completion and accounting and tax treatments of the
proposed transaction; the risk that any announcements relating to the proposed
transaction could have adverse effects on the market price of the common stock
of either or both parties to the proposed transaction; the possibility that the
anticipated benefits of the proposed transaction will not be realized when
expected or at all, including as a result of the impact of, or problems arising
from, the integration of the two companies or as a result of the strength of the
economy and competitive factors in the areas where LINK and Partners do
business? certain restrictions during the pendency of the proposed transaction
that may impact the parties' ability to pursue certain business opportunities or
strategic transactions; the possibility that the transaction may be more
expensive to complete than anticipated, including as a result of unexpected
factors or events? diversion of management's attention from ongoing business
operations and opportunities? the possibility that the parties may be unable to
achieve expected synergies and operating efficiencies in the merger within the
expected timeframes or at all and to successfully integrate Partners' operations
and those of LINK; such integration may be more difficult, time-consuming or
costly than expected; revenues following the proposed transaction may be lower
than expected; LINK's and Partners' success in executing their respective
business plans and strategies and managing the risks involved in the foregoing;
the dilution caused by LINK's issuance of additional shares of its capital stock
in connection with the proposed transaction; effects of the announcement,
pendency or completion of the proposed transaction on the ability of LINK and
Partners to retain customers and retain and hire key personnel and maintain
relationships with their suppliers, and on their operating results and
businesses generally; and risks related to the potential impact of general
economic, political and market factors on the companies or the proposed
transaction and other factors that may affect future results of LINK and
Partners; uncertainty as to the extent of the duration, scope, and impacts of
the COVID-19 pandemic on LINK, Partners and the proposed transaction; and the
other factors discussed in the "Risk Factors" section of each of LINK's and
Partners' Annual Report on Form 10-K for the year ended December 31, 2021, in
the "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" sections of each of LINK's and Partners'
Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, and
other reports LINK and Partners file with the SEC.
Additional Information and Where to Find It
In connection with the proposed transaction, LINK will file a registration
statement on Form S-4 with the SEC. The registration statement will include a
joint proxy statement of LINK and Partners, which also constitutes a prospectus
of LINK, that will be sent to shareholders of LINK and shareholders of Partners
seeking certain approvals related to the proposed transaction.
The information contained herein does not constitute an offer to sell or a
solicitation of an offer to buy any securities or a solicitation of any vote or
approval, nor shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. INVESTORS AND
SECURITYHOLDERS OF LINK AND PARTNERS AND THEIR RESPECTIVE AFFILIATES ARE URGED
TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY
STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM
S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN
CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT LINK, PARTNERS AND THE PROPOSED TRANSACTION. Investors and security
holders will be able to obtain a free copy of the registration statement,
including the joint proxy statement/prospectus, as well as other relevant
documents filed with the SEC containing information about LINK and Partners,
without charge, at the SEC's website (http://www.sec.gov). Copies of documents
filed with the SEC by LINK will be made available free of charge in the
"Investor Relations" section of LINK's website, https://ir.linkbancorp.com/,
under the heading "SEC Filings." Copies of documents filed with the SEC by
Partners will be made available free of charge in the "Investor Relations"
section of Partners' website,
https://www.partnersbancorp.com/investor-relations, under the heading "SEC
Filings."
Participants in Solicitation
LINK, Partners, and certain of their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies in respect of
the proposed transaction under the rules of the SEC. Information regarding
LINK's directors and executive officers is available in its Amendment No. 1 to
the Annual Report on Form 10-K, which was filed with the SEC on April 22, 2022,
and certain other documents filed by LINK with the SEC. Information regarding
Partners' directors and executive officers is available in its definitive proxy
statement, which was filed with the SEC on November 2, 2022, and certain other
documents filed by Partners with the SEC. Other information regarding the
participants in the solicitation of proxies in respect of the proposed
transaction and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with the SEC. Free
copies of these documents, when available, may be obtained as described in the
preceding paragraph.
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