The business combination is expected to create a purpose-driven, digital-first national bank that offers competitive rates and better customer experience
Patriot to buy American Challenger. (Credit: Firmbee from Pixabay.)
Patriot National Bancorp, the holding company of Patriot Bank, has agreed to acquire American Challenger Development in a reverse subsidiary merger valued at $119m.
Upon closing of the deal, American Challenger will survive as a wholly-owned subsidiary of Patriot.
The merger will create a digital-first national bank that offers competitive pricing and a technology-driven banking experience for customers.
Under the terms of the agreement, American Challenger stockholders will receive Patriot shares as consideration, while American Challenger stockholders would receive cash.
The proposed transaction has been approved by the boards of directors of both parties.
It is expected to close in the first quarter of 2022, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and Patriot’s shareholders.
Upon closing of the merger, Patriot Bank will adopt the American Challenger business plan and will operate as two divisions, the Patriot Bank division and the American Challenger division.
The Patriot Bank Division will continue as Patriot Bank’s existing business, and the American Challenger Division will execute the American Challenger business plan.
Adoption of American Challenger’s technology platform will enable Patriot Bank to operate with a technology-backed effective cost structure.
As part of the transaction, American Challenger board member and CEO Raymond J Quinlan will be appointed as CEO for the combined company.
Quinlan said: “We are building a digital bank that will leverage the best in technology and operational excellence to serve our customers and communities.
“This will be evident in the design and pricing of our banking products, in our delivery of superior personal service and in our clear commitment to corporate social responsibility.
“We believe in ‘banking for good’ and through our actions we will demonstrate that we are a purpose-driven financial institution.”
Simultaneously, Patriot has signed agreements with certain investors to raise around $540m through a private placement of newly issued Patriot common stock at $17.69 per share.
Also, the company aims to raise an additional $350m, for a total capital raise of $890m.
In addition to the sale of Patriot common stock and warrants, the company intends to buy subordinated debt securities and preferred stock of Patriot, referred to as recapitalisation.
American Challenger has also reached a term sheet with Sunlight Financial for a new, multi-year loan purchase programme worth up to $1.75bn.
Sunlight Financial is a financing platform for US residential solar projects, and the agreement will focus on loans for solar energy and battery storage systems in the US.
Patriot chairman Michael Carrazza said: “We’re excited to have engineered this industry-disrupting merger. The combination transforms Patriot to what will become the largest digital bank in the US.
“Customers will benefit from an expanded array of services and a tech-savvy banking experience, while shareholders should benefit from the compelling value that will be created.
“Patriot’s team will remain intact and will be complemented by American Challenger’s team and digital platform capabilities.”