The combined company is expected to become the third-largest bank based in Maryland, with 29 branch locations
Shore Bancshares to acquire Severn Bancorp. (Credit: Tumisu from Pixabay.)
Shore Bancshares has agreed to merge with Severn Bancorp in a stock and cash transaction valued at around $146m, or $11.30 per share.
The transaction price is based on the closing price for Shore’s common stock as on 2 March 2021.
Under the terms of the agreement, Severn’s shareholders are expected to receive 0.6207 shares of Shore common stock and $1.59 cash for each share of Severn common stock held.
The deal is expected to be completed in the third quarter of 2021, subject to satisfaction of customary closing conditions, including regulatory and shareholder approvals.
Upon closing of the transaction, Shore shareholders will own around 59.6% of the combined company, while Severn shareholders nearly 40.4%.
Shore would appoint four Severn directors to its Board, including Severn president and CEO Alan Hyatt.
Severn president and CEO Lloyd Beatty will be appointed as the combined company’s chairman of the board of directors.
Beatty said: “The addition of Severn to our organisation is very exciting. We will now have a presence in Anne Arundel County which is a wonderful market and fills in a gap in our footprint. The merger also brings new products and talent to our organisation.”
The combined company is expected to become the third-largest bank based in Maryland, with 29 branch locations, with increased scale, opportunities to enhance efficiencies and leverage investment in technology
Maryland-based Shore Bancshares is the holding company of Shore United Bank. The bank operates 22 full-service branches in Maryland and Virginia.
The transaction is expected to enable Shore to enter the greater Annapolis market, increase its footprint in Maryland by more than 50% to $2.3bn in deposits.
Severn Bancorp is the holding company of Severn Savings Bank, FSB, Mid-Maryland Title Co., operating through seven banking offices located in Anne Arundel County, Maryland.
The transaction is expected to increase market opportunities for current Severn products and services, and bring its total assets to nearly $2.9bn.
Hyatt said: “It is an opportunity for Severn to join forces with a larger organization and remain committed to community banking.
“We look forward to the opportunities and benefits this combination will bring to our shareholders, in terms of prospects for future earnings growth, immediate dividend pick-up and diversification, as well as to clients, employees and the many communities we serve.”
Janney Montgomery Scott served as financial advisor and Holland & Knight as legal counsel to Shore for the transaction. Piper Sandler & Co. served as financial advisor while Luse Gorman served as legal counsel to Severn.