Item 1.01. Conclusion of a significant definitive agreement

On September 20, 2022, Southern Missouri Bancorp, Inc., Poplar Bluff, Missouri (“Southern Missouri” or the “Company”), entered into an agreement and plan to amalgamate (the “Merger Agreement”) with Citizens Bancshares, Co., Kansas City, Missouri (“Citizens”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Citizens will merge with and into the Company, with the Company as the surviving Company (the “Merger”). Immediately after the Merger becomes effective (the “Effective Date”), the Company intends to merge Citizens Bank and Trust Company, a wholly owned subsidiary of Citizens, with and into Southern Bank, a subsidiary wholly-owned by the Company, with Southern Bank as the surviving institution (the “Bank Merger”). The merger agreement was approved and adopted by the company’s board of directors and the citizens. The merger is expected to close in the first calendar quarter of 2023, subject to customary closing conditions described below.

Under the terms of the merger agreement, unanimously approved by the boards of directors of both entities and assuming there is no change in the number of issued and outstanding common shares of Citizens, the Citizens shareholders are expected to receive either a fixed exchange ratio of 1.1448 shares of Southern Missouri common stock or a cash payment of $53.50 for each Citizens share, at the shareholders’ option, subject to adjustment based on Citizens capital and the total number of Citizens shares outstanding at the close. Based on Southern Missouri’s average closing price of $52.53 over the 20-day trading period ending September 19, 2022, the transaction value is approximately $140.0 million, consideration of the merger being composed of shares and cash at a ratio of 75:25. Upon completion of the Merger, Citizens shareholders will own approximately 18% of the combined company. Prior to the Effective Time, each option to purchase Citizens common stock (each, a “Citizens Option”), vested or unvested, will be canceled and converted into the right to receive cash (subject to the holdback provided for in the merger agreement) equal to the product of (x) $53.50 minus (y) the exercise price per share of the Citizens option.

The Merger Agreement contains customary company and citizen representations and warranties, and each party has agreed to customary covenants, including, among other things, covenants relating to (1) the conduct of its business during the interim period between execution of the Merger Agreement and effective time, including, in the case of Citizens, specific forbearances regarding its business activities, (2) the company’s obligation to call a special meeting of its shareholders to approve the issuance of common stock of the Company in connection with the merger, (3) the requirement for Citizens to call a special meeting of its shareholders to approve the merger agreement (the “meeting of shareholders de Citizens”) and, subject to certain exceptions, to recommend that its shareholders approve the merger agreement, and (4 ) Citizens’ non-solicitation obligations relating to alternative asset proposals ition.

Completion of the Merger is subject to customary conditions, including approval of the Merger Agreement by Citizen shareholders, approval of the issuance of Merger shares by Company shareholders and receipt of regulatory approvals required. The merger is currently expected to be completed in the first quarter of calendar year 2023.

The Merger Agreement provides certain termination rights for Southern Missouri and the Citizens and further provides that a $5.5 million fee will be payable by the Citizens upon termination of the Merger Agreement in certain circumstances. which are specified there. Certain shareholders, including members of the board of directors and officers of Citizens, have each signed a voting agreement pursuant to which they have agreed to vote their common shares of Citizens in favor of the merger agreement. Certain directors and executive officers of the Company have each signed a voting agreement pursuant to which they have agreed to vote their common stock of Southern Missouri in favor of the issuance of shares in connection with the merger.

Pursuant to the merger agreement, the Company will appoint as a director an individual who had been a director of Citizens at the date of the merger agreement for a term expiring at the annual meeting in 2025. The Company has not not determined who will be named at this time.

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