Business Context and Reporting Period
Company: First Busey Corporation (Busey)
Filing Type: Form 8-K (Current Report)
Date of Report: August 26, 2024
Event: Entry into a Material Definitive Agreement (Merger) with CrossFirst Bankshares, Inc. (CrossFirst).
On August 26, 2024, Busey and CrossFirst entered into an Agreement and Plan of Merger. Under the terms, CrossFirst will merge with and into Busey, with Busey as the surviving corporation. Subsequently, CrossFirst Bank will merge with and into Busey Bank. The transaction was unanimously approved by the Boards of Directors of both companies.
Key Financial Metrics and Transaction Terms
Merger Consideration:
- Common Stock: Each share of CrossFirst Common Stock will be converted into the right to receive 0.6675 shares of Busey Common Stock (Exchange Ratio).
- Fractional Shares: Cash in lieu of fractional shares will be paid to CrossFirst Common Stock holders.
- Preferred Stock: Each share of CrossFirst Series A Preferred Stock will convert into one share of a newly created Busey preferred stock series, or at Busey's election, cash equal to the liquidation preference plus accrued dividends.
Termination Fee: A fee of $36.7 million is payable by either party upon termination of the Merger Agreement under specific circumstances.
Capital Structure: Busey will propose to amend its articles of incorporation to increase authorized common shares from 100 million to 200 million.
Note: This filing does not provide specific revenue, profit, cash flow, or debt metrics for the reporting period. Investors should refer to the most recent Form 10-Q or 10-K for financial performance data.
Material Changes and Governance
Board Composition: Effective at the closing, the Busey Board will consist of 13 directors: 8 from Busey (including Van A. Dukeman) and 5 from CrossFirst (including Michael J. Maddox and Rodney Brenneman).
Leadership Roles:
- Van A. Dukeman: Will continue as Executive Chairman and CEO of Busey and Executive Chairman of Busey Bank.
- Michael J. Maddox: Will serve as Executive Vice Chairman of Busey, President of Busey, and CEO of Busey Bank.
Succession Plan: Following the earlier of the 12-month anniversary of the Bank Merger or the 18-month anniversary of the Effective Time, Mr. Maddox is scheduled to become CEO and President of Busey, while Mr. Dukeman remains Executive Chairman.
Headquarters: The surviving corporation's headquarters will be located in or near Kansas City, Missouri. Busey Bank's main office and legal headquarters will remain in Champaign, Illinois.
Executive Compensation Arrangements
Van A. Dukeman (Busey CEO):
- Agreed to a letter agreement ensuring compensation no less than Mr. Maddox's through the end of the "Specified Period."
- Waived constructive discharge rights regarding the succession plan.
- Severance rights converted to a "Retention Payment" paid in a lump sum on the one-year anniversary of closing, subject to continued employment.
- Subject to a non-competition covenant until the later of one year post-termination or the end of the Specified Period.
Michael J. Maddox (CrossFirst CEO):
- Agreed to a letter agreement ensuring compensation no less than Mr. Dukeman's through the end of the "Specified Period."
- Waived constructive termination rights regarding the succession plan.
- Severance rights converted to a cash retention award paid in three equal annual installments.
- Subject to a non-competition covenant until the later of one year post-termination or the end of the Specified Period.
Guidance, Risks, and Conditions
Conditions to Closing: The merger is subject to customary conditions, including:
- Approval by stockholders of both Busey and CrossFirst.
- Regulatory approvals from the Federal Reserve Board, Illinois Department of Financial and Professional Regulation, and Kansas Office of the State Bank Commissioner.
- Effectiveness of the Form S-4 registration statement.
- Listing approval on NASDAQ for the new shares.
- Busey Bank's application to become a member of the Federal Reserve System.
Risks and Uncertainties: The filing includes extensive forward-looking statements regarding the transaction's timing, cost savings, synergies, and integration. Risks include failure to obtain regulatory approvals, inability to realize anticipated benefits, integration challenges, dilution of Busey shareholders, and general economic or market factors.
Investor Verification Checklist
- Stockholder Approval: Verify the outcome of the stockholder votes required for both Busey and CrossFirst.
- Regulatory Status: Monitor the status of approvals from the Federal Reserve and state banking regulators.
- Form S-4: Review the upcoming joint proxy statement/prospectus (Form S-4) for detailed financial projections, pro forma information, and risk factors.
- Succession Timeline: Confirm the specific dates for the leadership transition from Mr. Dukeman to Mr. Maddox as CEO.
- Termination Fee: Note the $36.7 million termination fee and the specific scenarios triggering its payment.