I. Introduction
August 13, 2013 was an important day for both First Community Bank and Savannah River Financial Corporation. August 13, 2013 was the day that the two community banks entered into an agreement and plan of merger, in which First Community Bank would acquire Savannah River Financial Corporation. The merger would become effective by the end of the first quarter in 2014.
First Community Bank holds its headquarters in Lexington, SC and was founded in 1994 when the President and CEO, Mr. Michael C. Crapps, and his colleague, now fellow chairman of First Community Bank, Mr. James C. Leventis, met and discussed what was missing in the Columbia financial market. The two decided to start a bank that was locally owned and focused
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Simon and Mr. Potter contacted Mr. Crapps and discussed the potential of the proposed combined company, and what it could bring to their respective communities. They said that the combined banking institution would have the ability and the financial strength to more fully and more effectively serve the financial needs of the respective communities, be able to create greater economies of scale and operating leverage, and lastly, maximize shareholder value for both Savannah River and First Community Bank. Mr. Potter and Mr. Simon also pointed out the fact that First Community’s common stock is on the NASDAQ index (FCCO), would be able to provide Savannah River shareholders with a more liquid security than their own, which was not listed on any capital market. They also pointed out that shareholders would enjoy the dividend that First Community had historically paid, assuming that First Community would continue their historic trend. In addition to these discussion topics, Mr. Simon and Mr. Potter also presented a counteroffer to the $10.00 merger consideration proposal. They presented a counteroffer that consisted of Savannah River shareholders receiving a merger consideration valued at $11.00 per share and also proposed that four directors from Savannah River join the First Community board of directors in order to connect the two companies. Mr. Potter and Mr. Simon discussed the importance of certain Savannah River key personnel in the management of …show more content…
Crapps of First Community Bank presented his proposed value of the merger consideration, which was $11.00 per share payable in the form of 60% cash and 40% stock. Mr. Crapps explained that the $11.00 per share was based on the then current 10-day average trading price of First Community’s common stock and in connection with the $11.00 per share price was an exchange ratio of 1.1677 for the stock portion of the proposed merger consideration. After the presentation of this proposal, the board of directors at Savannah River met with their financial advisor at Ewing to discuss the details of the proposal and the merger. Together they considered the banks’ strategies, objectives, and challenges and determined if they were compatible with one another. They also discussed what move would be in the best interests of their shareholders. Upon this discussion, they decided it would be best for Savannah River to accept the proposal and move forward with due diligence and discussion of relative documents to present to the full board at Savannah River for their