ONB

SEC Filing Summary: Old National Bancorp (ONB)

Business Context and Reporting Period

Filing Type: Form 8-K (Current Report)
Date: November 25, 2024
Company: Old National Bancorp (ONB)
Event: Entry into a Material Definitive Agreement to acquire Bremer Financial Corporation ("Bremer").

On November 25, 2024, Old National Bancorp entered into an Agreement and Plan of Merger with Bremer Financial Corporation. The transaction involves a two-step merger where a subsidiary of ONB will merge with Bremer, followed by the merger of the surviving entity into ONB. Subsequently, Bremer's banking subsidiary will merge into Old National Bank. The agreement was unanimously approved by the boards of directors of both companies.

Key Financial Metrics and Transaction Terms

Merger Consideration: For each share of Bremer Common Stock (Class A and Class B), shareholders will receive:

• Cash: $26.22 per share (without interest).
• Stock: 4.182 shares of Old National Bancorp common stock.
• Fractional Shares: Cash in lieu of fractional shares.

Capital Raise (Forward Sale Agreement): ONB entered into a forward sale agreement with Citibank, N.A. for 19,047,619 shares of ONB common stock.

• Initial Forward Sale Price: $20.16 per share.
• Settlement: Expected to be physically settled within approximately 12 months.
• Underwriting Option: Underwriters have a 30-day option to purchase up to an additional 2,857,143 shares.

Financial Statements: The filing references unaudited pro forma financial information (Exhibit 99.4) and audited Bremer financial statements (Exhibit 99.5) but does not contain specific revenue, profit, or cash flow figures for Old National Bancorp within the text of this 8-K.

Material Changes and Conditions

Closing Conditions: The transaction is subject to customary conditions, including:

• Approval by Bremer's shareholders.
• Receipt of necessary regulatory approvals (e.g., Office of the Comptroller of the Currency, Federal Reserve System) without "Materially Burdensome Regulatory Conditions."
• Effectiveness of the Registration Statement on Form S-4.
• Equity Condition: Bremer must have Adjusted Tangible Shareholders' Equity of at least $1.3 billion as of the Measuring Date.

Voting Agreements:

• Trustee Voting Agreement: Trustees of the Otto Bremer Trust (holding approx. 86% of Bremer shares) agreed to vote in favor of the merger and refrain from transferring shares until closing.
• Director Voting Agreement: Bremer directors (holding <1% of shares) agreed to vote in favor.

Outlook, Risks, and Management Commentary

Management Commentary: The filing states the transaction is intended to create strategic and financial benefits, though specific synergy numbers are not detailed in this text. The combined entity will see an increase in the board of directors by one seat, to be filled by a trustee of the Otto Bremer Trust.

Investor Agreement & Lock-Up:

• Initial Lock-Up: 180 days post-closing where Trustees cannot transfer shares without consent.
• Extended Lock-Up: Additional 180 days with a 12.5% quarterly transfer limit.
• Registration Rights: Trustees receive customary registration rights until they own less than 10% of ONB common stock.

Risks and Contingencies:

• Regulatory Risk: Failure to obtain approvals or imposition of burdensome conditions could terminate the deal.
• Integration Risk: Potential difficulties in integrating operations, systems, and cultures.
• Market Risk: Changes in interest rates, economic conditions, or asset quality.
• Forward Sale Risk: The forward sale price is subject to daily adjustments based on interest rates and dividends; the Forward Purchaser may accelerate settlement under specific circumstances (e.g., inability to borrow shares).

Key Facts for Investor Verification

• Deal Structure: Verify the exact exchange ratio (4.182 shares + $26.22 cash) and the total implied valuation of Bremer.
• Regulatory Status: Monitor the status of approvals from the OCC and Federal Reserve, as these are critical closing conditions.
• Pro Forma Impact: Review the unaudited pro forma financial statements (Exhibit 99.4) to assess the accretive/dilutive impact on earnings per share and tangible book value.
• Capital Raise Timing: Confirm the settlement date of the 19 million share forward sale and the impact on ONB's liquidity and share count.
• Shareholder Approval: Track the date and outcome of the Bremer shareholder vote required to approve the merger.
• Termination Fees: Review the full Merger Agreement (Exhibit 2.1) for specific termination fee amounts payable by Bremer under various scenarios.