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Chemical-Talmer deal heads toward close this year, pending regulatory approval

BY Wednesday, July 20, 2016 03:52pm

The $1.4 billion merger between Chemical Financial Corp. and Talmer Bancorp Inc. heads to probable close later this year after securing shareholder approvals from both companies.

The next step for the acquisition, the largest ever by the Midland-based Chemical Financial (Nasdaq: CHFC) that’s been growing through a series of deals in recent years, is securing the approval of state and federal banking regulators.

The overwhelming approval of Chemical Financial shareholders yesterday occurred days after more than 99 percent of shareholders at Talmer Bancorp (Nasdaq: TLMR) supported the deal.

The strong backing from shareholders at both banks came as no surprise to Greg Roberts, a partner at advisory firm Van Conway & Partners LLC in Birmingham.

Talmer had assets of about $6 billion and faced limited growth prospects within its existing footprint, especially the “very highly competitive market” in Southeast Michigan, Roberts said. In turn, Talmer would become part of a growing institution that’s positioned statewide. The relative lack of redundancy in the branch network of the two banks makes the merger “a pretty good deal,” he said.

“The footprints overlay nicely,” he said. “It makes a ton of sense.”

Once the deal closes, the Midland-based Chemical Financial would have more than $16 billion in assets and 266 offices, mostly in Michigan and northeast Ohio. Under terms of the deal, Talmer Bancorp shareholders would receive $1.61 in cash and 0.4725 shares of Chemical Financial stock for each of their shares.

In West Michigan, Talmer Bank & Trust branches are in Grand Rapids, Portage, Holland, Muskegon and Grand Haven, locations that stem from a 2014 deal in which it bought the assets of the former Michigan Commerce Bank from the bankrupt Lansing-based Capital Bancorp. 

The deal would also give Chemical Financial an instant presence in Southeast Michigan for the first time. 

When first announced in January, the deal’s financial terms came under criticism from some Talmer shareholders. It’s also been challenged in three separate shareholder lawsuits, including by the City of Livonia Employees’ Retirement System.

Complaints about terms of any deal often arise in mergers, Roberts said. Unless the terms represent a “horrific, egregious act,” shareholders tend not to unite around dissidents.

“In any business transaction, there’s going to be differences of opinion on what constitutes the best deal,” Roberts said. “Putting a $6 billion bank up for bid in Southeastern Michigan, I don’t think that necessarily means you get a lot more for it.” 

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