Naugatuck Valley Financial Corp. has amended its merger agreement with Southern Connecticut Bancorp Inc. in an effort to put the new corporation that will emerge from the merger in a better capital position once the two banks have been combined, The Waterbury Republican-American reports.
Naugatuck Valley Financial, parent of Naugatuck Valley Savings and Loan, will pay Southern Connecticut Bancorp shareholders $6.75 for each share they hold instead of the $7.25 the two sides had agreed to when they announced the merger in February.
At 11:30 a.m., Southern Connecticut was off 3 cents at $8.69.
The new price per common share reflects weakened stock market conditions since the date of the original agreement, and will also place the new, combined company in a stronger financial position, said John C. Roman, Naugatuck Valley’s president and CEO.
The amended agreement reduces the total value of the deal from $19.5 million to about $18.2 million, Roman said Monday.
The amended agreement also changes the ratio of stock to cash that SCBI shareholders will receive, he said. Under the original agreement, SCBI shareholders were to receive 50 percent of the value of their shares in cash and 50 percent in shares of the new corporation that emerges from the merger, which will also be called Naugatuck Valley Financial Corp.
That ratio has now been amended to 60 percent in stock and 40 percent in cash.
The amended agreement also gives Elmer F. Laydon, the chairman of SCBI’s board of directors, a seat on the nine-member board of the new Naugatuck Valley Financial Corp., where he will join Alphonse F. Spadaro Jr., the vice chairman of SCBI’s board.
“They’re both very experienced and knowledgeable veterans of the banking industry,” Roman said. “We’re glad to have their help and expertise.”
The new agreement also extends the deadline for closing the merger to March 30, 2011, Roman said, an extension of about 30 days.
Naugatuck Valley will continue to operate the four SCBI offices it acquires under the name The Bank of Southern Connecticut.
Roman said he is hoping to complete the second step conversion and acquisition by late in the fourth quarter or early in the first quarter of 2011.
The Bank of Southern Connecticut, which was established in 2000, is a state-chartered, New Haven-based commercial bank with four banking offices, about $136 million in assets and about 35 employees. The bank has two locations in New Haven and single branches in North Haven and Branford.
