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
_____________________________________________________________________________
October 20, 1997
Date of Report (Date of earliest event reported): (October 14, 1997)
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CNB BANCSHARES, INC.
________________________________________
(Exact name of registrant as specified in its charter)
INDIANA
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(State or other jurisdiction of incorporation)
0-11510 35-1568731
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(Commission File Number) (IRS Employer Identification No.)
20 N.W. Third Street, Evansville, Indiana 47739
_________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 812-464-3400
Not Applicable
_____________________________________________________________
(Former name or former address, if changed since last report)
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ITEMS 1-4. Not applicable.
ITEM 5. OTHER EVENTS.
(a) CNB Bancshares, Inc., an Indiana corporation ("CNB"), and Pinnacle
Financial Services, Inc., a Michigan corporation ("Pinnacle"), have entered
into an Agreement and Plan of Merger, dated as of October 14, 1997 (the
"Merger Agreement"), which provides for the merger (the "Merger") of Pinnacle
with and into CNB. The Merger is subject to, among other customary
conditions, the requisite approvals of the shareholders of Pinnacle and CNB
and various regulatory approvals.
Pursuant to the Merger Agreement, (i) each issued and outstanding share
of common stock, without par value of Pinnacle (the "Pinnacle Common"), would
be exchanged for 1.0365 shares (the "Conversion Ratio") of common stock,
stated value $1.00 per share of CNB (the "CNB Common"), and (ii) each issued
and outstanding share of CNB Common would remain outstanding, unaffected by
the Merger.
The Merger Agreement may be terminated by Pinnacle if (i) the CNB Average
Price (defined in the Merger Agreement as the average of the daily closing
prices of CNB Common for the twenty consecutive New York Stock Exchange, Inc.
("N.Y.S.E.") trading days preceding the fifth calendar day prior to the
Closing Date (the "Determination Date")) is less than $36.00, and (ii) (a)
the number obtained by dividing the CNB Average Price by the CNB Starting
Price (defined in the Merger Agreement as the average of the daily closing
prices of CNB Common for the ten consecutive N.Y.S.E. trading days commencing
on the day five N.Y.S.E. trading days before the first public announcement of
the Merger) is less than (b) the number obtained by dividing the Index
Average Price (defined in the Merger Agreement as the weighted average of the
daily closing sale prices for all of the companies in the Index Group (listed
on Exhibit 7.09 of the Merger Agreement) for the twenty consecutive N.Y.S.E.
trading days ending on the Determination Date) by the Index Starting Price
(defined in the Merger Agreement as the weighted average of the daily closing
sale prices for all of the companies comprising the Index Group for the ten
consecutive N.Y.S.E. trading days commencing on the day five N.Y.S.E. trading
days before the first public announcement of the Merger) and multiplying the
quotient in this clause (ii)(b) by 0.82. CNB has the option, in the event
that Pinnacle determines to terminate the Merger Agreement pursuant to the
preceding sentence, to increase the Conversion Ratio pursuant to the formula
set forth in Section 7.09(b) of the Merger Agreement and, in such event, the
Merger Agreement would remain in effect as so adjusted.
The foregoing description of the Merger Agreement is qualified in its
entirety by reference to the Merger Agreement, which is attached as Exhibit 2
to the Form 8-K dated October 20, 1997, as filed by Pinnacle with the
Securities and Exchange Commission and incorporated herein by reference.
(b) In connection with the execution of the Merger Agreement, CNB and
Pinnacle entered into a Stock Option Agreement, dated as of October 14, 1997
(the "Option Agreement"), pursuant to which Pinnacle granted CNB the right to
purchase from Pinnacle up to 2,000,000 shares of Pinnacle Common at a price
of $37.00 per share (subject to possible adjustment pursuant to Section 5 of
the Option Agreement), upon the occurrence of certain events described in the
Option Agreement relating generally to the acquisition of Pinnacle by a third
party.
The foregoing description of the Option Agreement is qualified in its
entirety by reference to the Option Agreement, which is attached as
Exhibit 99.1 to the Form 8-K dated as of October 20, 1997, as filed by
Pinnacle with the Securities and Exchange Commission and is incorporated
herein by reference.
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(c) The joint press release of CNB and Pinnacle announcing the execution
of the Merger Agreement is attached hereto as Exhibit 99.2 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS
PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(a) - (b) Not applicable.
(c) Exhibits Required by Item 601 of Regulation S-K:
2 Agreement and Plan of Merger, by and between CNB Bancshares,
Inc. and Pinnacle Financial Services, Inc., dated as of October
14, 1997 (incorporated by reference to Exhibit 2 of the Form 8-K
of Pinnacle dated as of October 20, 1997).
99.1 Stock Option Agreement, by and between CNB Bancshares, Inc.
and Pinnacle Financial Services, Inc. dated as of October 14,
1997 (incorporated by reference to Exhibit 99.1 of the Form 8-K
of Pinnacle dated as of October 20, 1997).
99.2 Press release issued by CNB Bancshares, Inc. and Pinnacle
Financial Services, Inc. on October 15, 1997.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: October 20, 1997.
CNB BANCSHARES, INC.
By: /s/ John R. Spruill
_______________________________________
John R. Spruill
Executive Vice President and Chief Financial Officer
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EXHIBIT INDEX
_____________
Exhibit No. Description
___________ ___________
2 Agreement and Plan of Merger, by and between CNB
Bancshares, Inc. and Pinnacle Financial Services, Inc.,
dated as of October 14, 1997 (incorporated by reference to
Exhibit 2 of the Form 8-K of Pinnacle dated as of October
20, 1997).
99.1 Stock Option Agreement, by and between CNB Bancshares,
Inc. and Pinnacle Financial Services, Inc., dated as of
October 14, 1997 (incorporated by reference to Exhibit
99.1 of the Form 8-K of Pinnacle dated as of
October 20, 1997).
99.2 Joint press release issued by CNB Bancshares, Inc. and
Pinnacle Financial Services, Inc. on October 15, 1997.
EXHIBIT 99.2
[CNB Bancshares, Inc. Logo] [Pinnacle Financial Services, Inc. Logo]
FOR FURTHER INFORMATION:
CNB:
Media
Joan F. David
Corporate Relations
812-464-3564
[email protected]
Analysts
James J. Giancola John R. Spruill
Chief Executive Officer Chief Financial Officer
812-464-3265 812-461-3043
[email protected] [email protected]
PINNACLE:
Media Analysts
LeAnn Krokker Richard L. Schanze David W. Kolhagen
Executive Marketing Officer Chairman & Chief Financial
616-983-6311 ext. 330 Chief Executive Officer Officer
616-983-5567 616-983-6311 ext. 313
FOR IMMEDIATE RELEASE OCTOBER 15, 1997
CNB BANCSHARES AND PINNACLE FINANCIAL SERVICES AGREE TO MERGE
James J. Giancola, President and CEO of CNB Bancshares, Inc. (NYSE:BNK) and
Richard L. Schanze, Chairman and CEO of Pinnacle Financial Services, Inc.
(NASDAQ:PNFI) jointly announced today the execution of a definitive agreement
for a merger between the two companies. The merger, valued at $583 million,
will create a company with assets of $6.6 billion and operations in southwest
Michigan, Indiana, Kentucky and southern Illinois. Arnold Weaver, President
and COO of Pinnacle Bank, will become President and CEO of the Michigan-based
bank subsidiary upon completion of the merger. The agreement has been
approved by the boards of directors of both companies and is subject to the
approval of shareholders and regulatory agencies. The merger is expected to
close in the second quarter of 1998.
Giancola said, "This strategic expansion of CNB's markets into northwest
Indiana and southwest Michigan gives us the mass and depth to excel well into
the next century. This merger allows us to further leverage our technology
investments and to realize important synergies in key business lines. The
merger, which is expected to be slightly accretive to earnings in 1998 and
solidly accretive in 1999, will undoubtedly enhance future shareholder value.
Pinnacle has had an exciting growth and earnings history which we expect will
continue as a significant portion of their management team will join ours."
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Schanze commented, "Ten years ago we made the decision to grow our then $150
million company to become a premier bank in the southwest Michigan/northwest
Indiana market. During these 10 years we have grown to $2.2 billion in
assets through seven significant acquisitions. This merger with CNB
successfully completes our plan. Our shareholders have been richly rewarded
through a compound total annual return in their investment in Pinnacle
exceeding 30% since 1989."
Weaver added, "We are looking forward to joining the CNB organization. CNB's
more extensive product line will add tangible benefits to our small to middle
market business customers -- especially in the cash management, trust and
employee benefit plan areas. Our retail customers will benefit from CNB's
internet banking, expanded mortgage loan products, and trust services. In
addition, our customers will be able to utilize the 142 offices and 174 ATM's
from southwestern Michigan, through all of Indiana, north to south, and into
southern Illinois and Kentucky. Finally, our associates will join a growing
company that has a reputation for providing excellent benefits and career
opportunities."
Giancola concluded, "This is an historic event for CNB. This gives us entry
into a fast growing and dynamic market. We are familiar with these markets
through my prior experience in northwest Indiana and the number of customers
we already serve in that market. Pinnacle has already reduced their expense
base by about 20% from their two recent mergers. We are looking to reduce
expenses by an additional 10-15% which should result in few staff reductions.
In addition, we plan to add additional staffing in the commercial lending and
trust areas, especially in the Valparaiso and Merrillville markets. This
transaction will take our market capitalization to over $1.5 billion and
provide better liquidity and market depth to shareholders of both companies.
The combined company will rank about 69th in the nation in terms of asset
size."
A transaction summary and table of pro forma operations are attached. CNB
Bancshares and Pinnacle Financial Services will participate in a telephone
conference call for analysts and reporters at 9:00 a.m. Central Time this
morning. To participate in the conference call, please call 816-650-0613.
Supplementary material relating to the discussion of the merger announcement
is available to participants by fax at 1-800-753-0352 Box #706 or on the
internet at http://www.citizensonline.com/new/pressrel.
FORWARD-LOOKING INFORMATION
This news release and supporting materials contains statements regarding the
performance of CNB and Pinnacle on a stand-alone and pro forma combined
basis. These statements constitute forward-looking information within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from the projections discussed in this release
since such projections involve significant risks and uncertainties. Factors
that might cause such differences include, but are not limited to:
(1) revenues following the merger are lower than expected and/or expenses are
higher than expected; (2) costs or difficulties related to the integration of
the respective businesses are greater than expected; (3) competitive
pressures among financial institutions increase significantly; (4) economic
conditions, either nationally or locally in areas in which the combined
companies will conduct their operations, are less favorable than expected;
and (5) legislation or regulatory changes adversely affect the businesses in
which the combined companies would be engaged.
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CNB BANCSHARES AND PINNACLE FINANCIAL SERVICES
TRANSACTION SUMMARY
Deal value (1) $583 million
Purchase price per share $46.32
Premium to market 18%
Price to book value 347%
Price to estimated 1997 earnings (2) 22x
Price to estimated 1998 earnings (2) 18x
Fixed exchange ratio 1.0365
Method of accounting Pooling
Pinnacle ownership 39%
(1) Based on CNB's closing price of $44.69 on October 13.
(2) Based on analysts' estimates, not management's forecast.
PRO FORMA OPERATIONS
$ in millions
CNB Pinnacle Pro
Forma
Assets $4,400 $2,200 $6,600
Loans 2,400 1,500 3,900
Deposits 3,000 1,500 4,500
Equity 330 170 500
Market cap. 915 470 1,500
Offices 95 47 142
ATMs 129 45 174
