SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 1, 1999
MECH Financial, Inc.
(Exact name of registrant as specified in its charter)
Connecticut
State or other jurisdiction of incorporation
Commission file number: 000-23557
I.R.S. Employee Identification No.: 06-1500984
100 Pearl Street
Hartford, CT 06103
(Address of principal executive offices)
(860) 293-4000
(Registrant's telephone number, including area code)
Item 5: Other Events
On December 1, 1999, MECH Financial, Inc. ("MECH") and Webster
Financial Corporation ("Webster") entered into an Agreement and
Plan of Merger (the "Agreement") which provides for, among other
things, the acquisition of MECH by Webster through a stock-for-
stock exchange. Contemporaneous with the completion of the
acquisition, Mechanics Savings Bank, a wholly-owned subsidiary of
MECH, will merge with and into Webster Bank, a wholly-owned
subsidiary of Webster. The Agreement provides that shareholders of
MECH will receive 1.52 shares of Webster common stock for each
share of MECH common stock. The transaction is designed to be a
tax-free exchange to the holders of MECH common stock and is to be
accounted for as a pooling of interests. The Boards of Directors of
MECH and Webster expect the transaction to close in the second
quarter of 2000.
The Acquisition is subject to customary conditions, including
but not limited to, the approval of federal bank regulatory
authorities, the Connecticut Banking Commissioner and MECH
shareholders, the issuance of a fairness opinion of MECH's
financial advisor indicating that the transaction is fair to MECH
shareholders, and the absence of a material adverse change in the
business of Webster or MECH.
The transaction may be terminated by one or both of the
companies' Boards of Directors if, among other things: (i) the
average price of Webster stock during a trading period specified in
the Agreement declines 20% or more on an absolute basis and 15% or
more relative to a bank stock index created for this transaction;
(ii) MECH Shareholders do not approve the transaction; (iii) all
regulatory approvals are not obtained; (iv) the closing does not
occur by August 31, 2000; (v) a breach of a representation or
warranty made in the Agreement occurs that has or is likely to have
a material adverse effect on either company; or (vi) there has been
a material breach of any covenant or agreement contained in the
Agreement.
In connection with the Agreement, MECH has issued an option to
Webster, which, upon the occurrence of certain events, may result
in the issuance of 19.9% of the outstanding MECH common stock to
Webster at a per share exercise price equal to $34.50. The
Agreement also includes a provision for break-up fees to either
party upon the occurrence of certain events should the transaction
not close as presently anticipated.
MECH's Directors and Executive Officers have agreed in a
separate agreement to vote all of their shares in favor of the
Agreement. MECH Directors and Executive Officers hold 522,445
shares of MECH common stock, or approximately 10.5% of the
currently outstanding shares of MECH common stock.
MECH is headquartered in Hartford, Connecticut and had assets
of approximately $1.1 billion.
Item 7: Exhibits
99.1 Press Release of Webster Financial Corporation dated December 2,
1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: December 7, 1999 MECH Financial, Inc.
By: /s/
Thomas M. Wood
Its Executive Vice President and Treasurer
FOR IMMEDIATE RELEASE:
Webster Contacts:
Media: Mike Bazinet, 203-578-2391
[email protected]
Jim Kalach, 203-578-2461
[email protected]
Investors: James Sitro, 203-578-2399
[email protected]
Mechanics Savings Bank: Edgar C. Gerwig, 860-241-2838
WEBSTER BANK TO ACQUIRE MECHANICS SAVINGS BANK
WATERBURY, Conn., December 2, 1999 - - Webster Financial Corporation
(Nasdaq: WBST) today announced that it has reached a definitive agreement
to acquire MECH Financial, Inc. (Nasdaq: MECH), the holding company for
Mechanics Savings Bank, in a tax-free, stock-for-stock exchange valued at
approximately $210 million. Mechanics Savings Bank is a state-chartered,
Hartford-based savings bank with $1.1 billion in assets and 16 branch
offices in the capital region.
Based on the terms of the agreement, Mechanics shareholders will receive
1.52 shares of Webster common stock for each share of Mechanics they
hold. For illustrative purposes, based on Webster's average closing
price for the last six months of $26.97, this would be equal to $41.00 a
share. Based on Webster's closing price on December 1, 1999 of $26.00,
this would be equal to $39.52 a share. Webster expects to record
after-tax acquisition related charges of $10.9 million for the
transaction.
"Our partnership with Mechanics Savings Bank significantly enhances
Webster's franchise in Hartford County, where we already rank number two
in deposit market share," said James C. Smith, Webster chairman and chief
executive officer. "Mechanics customers will benefit from having greater
convenience through our extensive network of branches and ATMs and will
enjoy a broader selection of services. In the meantime, Mechanics
customers should continue to bank as they normally do. We will make the
transition to Webster simple and convenient for our new customers."
Mechanics branch offices are located in Avon, Bloomfield, East Hartford,
Glastonbury, Hartford, Manchester, New Britain, Wethersfield, West
Hartford and Windsor. Please see accompanying list for address.
With the addition of Mechanics, the pending merger of New England
Community Bancorp, and the previously announced agreements to purchase
FleetBoston and Chase Manhattan branches, Webster will have more than $11
billion in assets, ranking it as the fifth largest New England based
bank.
The purchase price is approximately 2.2 time Mechanics' book value and
16.9 times core earnings for the last 12 months. The acquisition is
expected to contribute positively to Webster's earnings per share in the
first year. Webster expects to account for the transaction as a pooling
of interests.
"Given both banks' strong commitment to our customers and to Connecticut,
Webster is an ideal merger partner," said Edgar C. Gerwig, Mechanic's
chairman, president and chief executive officer. "Banking and financial
services are changing rapidly. Our Board believes that merging with
Webster best serves the interests of our communities, shareholders,
customers and employees. We will enhance our ability to provide
financial services, including expanded business banking offerings as
well as trust, insurance services, and Web-based banking."
The definitive agreement, which has been approved by both companies'
boards of directors, is subject to approval by regulatory authorities and
Mechanics shareholders. Webster expects the transaction to close in the
second quarter of 2000.
"When two banking companies in the same market merge to form a stronger
bank, there will inevitably be duplication of duties, resulting in some
job eliminations," said William T. Bromage, Webster senior executive vice
president. "While we have not yet determined the number of overlapping
positions, we expect to offer positions to most of the branch office
employees and will do all we can to keep the number of position
eliminations to a minimum. Mechanics employees whose positions are
eliminated will be given preference for open positions in the rapidly
growing Webster organization. Our history demonstrates a pattern of
successfully placing most employees affected by our mergers."
No decisions have been made with regard to potential branch office
consolidations resulting from geographic proximity with existing Webster
Bank branches. Mechanics customers will have vastly more branches and
ATMs to serve them following this merger.
Pro forma for pending merger and branch purchase activity, Webster Bank
has $11 billion in assets and operates through a network of more than 125
banking offices, three commercial banking centers, and 200 ATMs, in
addition to telephone, video, Web and PC banking.
Webster is also a leading, full-service commercial and mortgage lender in
Connecticut. Webster Trust, the bank's trust and investment management
subsidiary, is one of the leading bank trust companies based in
Connecticut. Webster's insurance subsidiary, Damman Insurance
Associates, is one of the largest agencies in the state.
Webster's Nowlending subsidiary found at www.nowlending.com on the
Worldwide Web, originates low-cost mortgages over the Internet for
customers across the United States.
For more information on Webster visit www.websterbank.com.
Conference Call
A conference call covering this transaction will be held today, Thursday,
December 2, 1999 at 10:00 a.m., Eastern Time and may be heard through
Webster's investor relations website at www.wbst.com. The call will be
archived on the website and available for future retrieval.
Statements in this press release regarding Webster Financial
Corporation's business that are not historical facts are "forward looking
statements" that involve risks and uncertainties. For a discussion of
such risks and uncertainties, which could cause actual results to differ
from those contained in the forward-looking statement, see "Forward
Looking Statements" in the Company's Annual Report for the most recently
ended fiscal year.
Mechanics Savings Bank Branch Offices
Hartford: 100 Pearl Street (Main Office), 202 Farmington Avenue, Park
Street at Lawrence
West Hartford: Bishops Corner, Elmwood, 927 Farmington Avenue, 124
LaSalle Road
Avon: Nod Brook Mall
Bloomfield: Copaco Shopping Center
East Hartford: 1491 Silver Lane, 1065 Main Street
Glastonbury: 2450 Main Street
Manchester: 341 Broad Street
New Britain: 446 South Main Street
Wethersfield: Wethersfield Shopping Center
Windsor: 156 Broad Street
