Nicolet Bank won’t acquire Commerce State Bank after coronavirus cuts into stock price

Commerce State Bank headquarters
Commerce State Bank headquarters in West Bend.

Green Bay-based Nicolet Bank has terminated its agreement to acquire West Bend-based Commerce State Bank citing the impact of coronavirus and falling stock price for the publicly traded Nicolet Bank.

Nicolet notified the U.S. Securities and Exchange Commission of its decision to end the $129.6 million, all-stock deal Monday.

The terms of the agreement gave either bank the right to terminate the merger if Nicolet’s common stock price fell below $62 per share at the time of closing, according to a May 18 SEC filing. Nicolet had expected to close the deal mid-summer.

However, the stock price for Nicolet common stock fell more than 30 percent since the merger agreement was signed in February and has not traded above $62 per share for more than two months. Both Nicolet and Commerce Bank felt it was unlikely that Nicolet’s stock price would reach $62 per share before the deal closed, according to the filing.

“Rather than continuing to pursue and plan for a transaction that is unlikely to close, the parties believe it is in the best interests of their respective shareholders, customers and employees to mutually agree to terminate the Merger Agreement which will enable them to focus more on addressing the impacts of the pandemic on their businesses and customers,” Nicolet wrote in the SEC filing.

The banks’ inability to integrate teams and conduct training due to the need for social distancing was also a factor, said Joe Fazio, Commerce State Bank chief executive officer and co-founder.

The initial reasons for the merger, including a larger footprint, cost savings and serving more communities, remained despite COVID-19, Fazio added.

“It’s just so uncertain in terms of when can we reconnect and really leverage the power of combining a few banks,” Fazio said. “It remained unknown and we felt it was prudent to pause.”

The termination agreement also calls for Nicolet to pay Commerce $500,000 and surrender 4,000 shares of Commerce common stock to help address the costs incurred by having entered the merger agreement.

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