January 19, 2007 03/07
CHITTENDEN TO ACQUIRE MERRILL MERCHANTS BANCSHARES, INC.
Burlington, VT -- Chittenden Corporation (NYSE: CHZ) and Merrill Merchants Bancshares, Inc.
(NASDAQ: MERB) (Merrill), announced today that they signed a definitive merger agreement
whereby Chittenden will acquire Merrill and its subsidiary, Merrill Merchants Bank, for
approximately $111.4 million in cash and stock. Consummation of the agreement is subject to
the approval of the shareholders of Merrill, as well as various regulatory agencies.
The
acquisition is expected to close in the second quarter of 2007. Following the completion of the
transaction, Merrill Merchants Bank will operate as a separate unit of Chittenden Corporation,
maintaining its name and senior management team.
In announcing the agreement, Paul A. Perrault, Chittenden's Chairman, President and Chief
Executive Officer, said, I am delighted that Merrill Merchants will join the Chittenden family of
banks. Their well-established history of relationship banking has resulted in strong growth and
high performance, and therefore will blend into our culture and strategies very nicely. By using
Chittendens broad capabilities and products, they will be able to deepen their relationships and
attract new ones. With a very strong and experienced management team remaining in place,
this is a great strategic fit for both companies.
Edwin Clift, Chairman and Chief Executive Officer of Merrill Merchants Bancshares, Inc.,
commented, "Merrill has accomplished a great deal as an organization and has operated at a
high level of performance. We have known the management group at Chittenden for a number
of years, and in working together have found that our banking policies and philosophies are very
similar. Chittenden understands community banking and the need to keep local bankers with
authority in place. Our Board of Directors carefully considered the interests of our shareholders
and employees and determined Chittenden to be an ideal merger partner for us. This
transaction is good news for our communities, customers, and employees."
Under the terms of the merger agreement, shareholders of Merrill can elect to receive $31.00
per share in cash, with total cash consideration of approximately $44.57 million, or 1.02 shares
of Chittenden common stock for each share of Merrill stock they own, with total stock
consideration of approximately 2.20 million shares of Chittenden common stock. Elections will
be subject to allocation procedures that are intended to ensure that 60% of the Merrill common
stock outstanding immediately prior to consummation of the merger will be converted to
Chittenden common stock. The transaction is intended to qualify as a reorganization for federal
income tax purposes, and as a result, the shares of Merrill common stock exchanged for shares
of Chittenden common stock are expected to be transferred on a tax-free exchange basis.
Chittenden was advised by its legal counsel, Goodwin Procter LLP. Merrill was advised by,
Keefe, Bruyette & Woods, Inc., and its legal counsel was Thacher Proffitt & Wood LLP,
Washington, D.C.
Merrill and its subsidiary, Merrill Merchants Bank, are headquartered in Bangor, Maine. Merrill
had total assets of $449 million, $339 million in loans, deposits of $360 million, and $39 million
of stockholders' equity at December 31, 2006. Merrill presently operates 11 banking offices in
central and eastern Maine.