FRME announced that it completed the LNCB merger successfully on Dec. 31, 2008.

Here’s how I made out on the deal:

I get to choose either:

  • 0.7004 shares of FRME for each of my LNCB. $22.21 * 0.7004 = $15.56. IOW, $15.56 for each share of LNCB if I sell my FRME stock soon after the deal closes.
  • $15.76 cash for each share of LNCB.

Since I am not in FRME for the long term, I will take the cash offer.

I entered at $13.  I will get $15.76.  I entered the stock on 10/14/2008.  Ignoring commissions, my ROI was 21.2%.  My annualzed return was 99.3%!

Something to note here… there were some rules/limits on the amount of cash the would be distributed (which I talked about here).  If everyone takes the cash deal, there will not be enough cash.  In that case, they will be given stock.  For number crunching purposes, I am just ignoring all that for now and assuming I will get 100% of the pay out in cash.

Nuts and bolts of the deal payoff:

“In connection with the Merger, shareholders of Lincoln Bancorp were offered the opportunity to elect to receive either 0.7004 shares of First Merchants Corporation common stock or $15.76 in cash in exchange for each Lincoln Bancorp common share owned by them. Pursuant to the terms of the Merger, under certain circumstances, the 0.7004 exchange ratio was subject to adjustment and the cash elections made by Lincoln Bancorp shareholders were subject to being converted into elections to receive stock. Although the 0.7004 exchange ratio will not be adjusted, the cash elections made by Lincoln shareholders will be proportionately converted into elections to receive stock in accordance with the terms of the Agreement of Reorganization and Merger referenced below. Cash will also be paid by First Merchants Corporation in lieu of issuing fractional shares resulting from the 0.7004 exchange ratio.”

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