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Months before agreeing to merge with Cambridge Trust Co., Northmark Bank had considered merging into a different bank, and the two institutions had agreed to work exclusively on a potential deal.
Andover-based Northmark Bank had signed an exclusivity agreement on Dec. 16 with a bank referred to as financial institution A in Northmark’s preliminary proxy statement and Cambridge Bancorp’s preliminary prospectus filed with the Securities and Exchange Commission.
Northmark’s board of directors began working with financial adviser Griffin Financial Group in October to find a potential merger partner or other alternatives to enhance shareholder value, the filing said.
Discussions with financial institution A began in late fall, and this bank made a non-binding proposal to acquire Northmark in an all-cash transaction worth $98.31 per share of Northmark stock.
After preliminary due diligence, financial institution A decided not to go ahead with the transaction, the filing said, and the exclusivity agreement was terminated on Jan. 25.
Griffin Financial Group then had discussions with other banks before contacting Cambridge Trust on March 7. Cambridge Trust’s CEO Denis Sheahan and Northmark’s CEO Jane Walsh met twice in March, and the two banks began due diligence investigations of each other at the end of the month, the filing said.
Cambridge Trust made its first proposal in mid-April to acquire Northmark in an all-stock transaction that valued Northmark’s stock at $78.69 per share based on the market price of Cambridge’s common stock on April 14, with a fixed exchange ratio of 0.9858 shares of Cambridge common stock. The banks signed an exclusivity agreement on April 21.
Following negotiations between the banks, Cambridge revised its proposal, offering an all-stock transaction with a fixed exchange ratio of 0.9950.
The banks announced a merger agreement after the market closed on May 23. Based upon Cambridge’s closing price of $79.94 on May 20, the transaction was valued at $79.54 per share of Northmark common stock, or approximately $63 million. The deal, which is expected to close in the fourth quarter, is subject to regulatory approval and approval by Northmark’s shareholders.
