First Defiance Financial falls on merger news
Shares First Defiance Financial Corp. (Nasdaq: FDEF) are falling following news after the close on Tuesday that it will acquire Pavilion Bancorp Inc. and its subsidiary, the Bank of Lenawee, for $55.7 million.
Defiance, Ohio-based First Defiance Financial, which is the holding company for First Federal Bank of the Midwest and First Insurance & Investments, announced that it has entered into a definitive buyout agreement according to which each Pavilion Bancorp shareholder will receive 1.4209 shares of First Defiance common stock and $37.50 in cash.
“This acquisition allows us to expand farther north into the southeastern Michigan market and it adds the type of communities that have been very responsive to our ‘Customer First’ style of banking,” said First Defiance Chairman, President and CEO William Small in a statement.
Pavilion Bancorp is the parent corporation of Adrian, Mich.-based Bank of Lenawee, which has eight branches in the southeastern part of the state and $290 million in assets.
The transaction should be finalized in the first quarter of 2008, after which First Defiance will seek regulatory approval to convert to a bank holding company. Additionally, First Defiance said that the acquisition will be accretive to earnings during the first 12 months. The company estimates annual pre-tax expense reductions of approximately $3.5 million with the majority realized in 2008.
At 1:06 p.m. ET, shares of First Defiance Financial Corp. (FDEF) were down $1.32, or 5%, to $25.45. The 52-week high of $30.70 was reached on Dec. 27, 2006. The 52-week low of $23.99 was touched on Aug. 10, 2006.
