Howard Bancorp Buys Patapsco Bancorp For $10.1 Mln in Cash, Stock
Howard Bancorp (HBMD) said it has agreed to acquire Patapsco Bancorp for $10.1 million in a mixture of cash and stock.
Patapsco shareholders will receive $5.09 per share in cash and the remaining in Howard Bancorp stock. The cash share amounts to 20% of the total consideration.
The parent company of Howard Bank said the per share exchange ratio for the stock portion will be based on the average closing price of Howard’s common stock for the 20 trading days prior to the five business days immediately before closing, subject to a maximum exchange ratio of 0.5656 and a minimum exchange ratio of 0.3030.
It said it can elect to change the stock/cash mix from 80%/20% to up to 50%/50% at its election, subject to certain conditions. Meanwhile, Patapsco has the right to terminate the transaction if Howard’s 20 day average closing price is less than $7.20 per share and certain other conditions are met.
The deal is expected to be accretive to earnings in the first full year of operations. It is expected to close in Q3 or early in Q4.
Meanwhile, Howard said it will sell 2.17 million shares for $25 million in a private placement with institutional bank investors at a price of $11.50 per share. The proceeds will be used to support the merger and continued organic and inorganic growth for the combined institution.
HBMD was unchanged in recent trade at $13.75, in the upper half of the 52-week range between $9.25 and $14.90. Patapsco trades in the OTC market and closed at $3.02 on Monday. It was not yet trading on Tuesday.