Item 8.01 Other Events.
As previously disclosed, on April 18, 2021, Sterling Bancorp, a Delaware
corporation ("Sterling"), entered into an Agreement and Plan of Merger (as
amended from time to time, the "merger agreement") with Webster Financial
Corporation, a Delaware corporation ("Webster"). The merger agreement provides
that, upon the terms and subject to the conditions set forth therein, Sterling
will merge with and into Webster (the "merger"), with Webster as the surviving
corporation in the merger. The merger agreement was unanimously approved by the
board of directors of each of Sterling and Webster.
In connection with the proposed merger, Webster filed with the Securities and
Exchange Commission (the "SEC") a registration statement on Form S-4 containing
a joint proxy statement/prospectus, as amended, and filed a definitive joint
proxy statement/prospectus with the SEC dated July 8, 2021 (the "joint proxy
statement/prospectus"), which Webster and Sterling first mailed to their
respective shareholders on or about July 8, 2021.
Following the announcement of the merger agreement, as of the date of this
Current Report on Form 8-K, seven lawsuits challenging the merger have been
filed (each, a "Lawsuit" and, collectively, the "Lawsuits"). The first Lawsuit,
captioned Elaine Wang v. Sterling Bancorp et al. (Case No. 7:21-cv-05363-VB),
was filed in the U.S. District Court for the Southern District of New York on
June 17, 2021. The second Lawsuit, captioned Malka Raul v. Sterling Bancorp et
al.(Case No. 1:21-cv-05560), was filed in the U.S. District Court for the
Southern District of New York on June 25, 2021. The third Lawsuit, captioned
Alex Ciccotelli v. Sterling Bancorp et al. (Case No. 1:21-cv-05604), was filed
in the U.S. District Court for the Southern District of New York on June 28,
2021. The fourth Lawsuit, captioned Samantha Sharpe v. Sterling Bancorp et
al.(Case No. 1:21-cv-03783), was filed in the U.S. District Court for the
Eastern District of New York on July 6, 2021. The fifth Lawsuit, captioned Joey
Zalvin v. Webster Financial Corporation et al. (Case No. 21CV001045), was filed
in the Superior Court in the State of Connecticut, Judicial District of
Waterbury, on July 8, 2021. The sixth Lawsuit, captioned Paul Parshall v.
Sterling Bancorp et al. (Case No. 1:21-cv-01097-UNA), was filed in the U.S.
District Court for the District of Delaware on July 29, 2021. The seventh
Lawsuit, captioned Stephen Bushansky v. Sterling Bancorp et al. (Case
1:21-cv-06558), was filed in the U.S. District Court for the Southern District
of New York on August 3, 2021. In addition, Sterling received demand letters
from counsel representing individual stockholders of Sterling (the "Demand
Letters" and, together with the Lawsuits, the "Matters"). The Matters each
allege, among other things, that the defendants caused a materially incomplete
and misleading joint proxy statement/prospectus relating to the proposed merger
to be filed with the SEC in violation of Sections 14(a) and 20(a) of the
Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder and/or in
breach of their fiduciary obligations under state law.
Sterling and Webster believe that the claims asserted in the Matters are without
merit and supplemental disclosures are not required or necessary under
applicable laws. However, in order to avoid the risk that the Matters delay or
otherwise adversely affect the merger, and to minimize the costs, risks and
uncertainties inherent in litigation, and without admitting any liability or
wrongdoing, Sterling and Webster have agreed to supplement the joint proxy
statement/prospectus as described in this Current Report on Form 8-K. Sterling,
Webster and the other named defendants deny that they have violated any laws or
breached any duties to Sterling's stockholders or Webster's stockholders, as
applicable. Nothing in this Current Report on Form 8-K shall be deemed an
admission of the legal necessity or materiality under applicable laws of any of
the disclosures set forth herein. To the contrary, Sterling and Webster
specifically deny all allegations in the Matters that any additional disclosure
was or is required.
Supplemental Disclosures to Joint Proxy Statement/Prospectus in Connection with
the Matters
The additional disclosures (the "supplemental disclosures") in this Current
Report on Form 8-K supplement the disclosures contained in the joint proxy
statement/prospectus and should be read in conjunction with the disclosures
contained in the joint proxy statement/prospectus, which should be read in its
entirety. To the extent that information set forth in the supplemental
disclosures differs from or updates information contained in the joint proxy
statement/prospectus, the information in this Current Report on Form 8-K shall
supersede or supplement the information contained in the joint proxy
statement/prospectus. All page references are to the joint proxy
statement/prospectus and terms used but not otherwise defined herein shall have
the meanings ascribed to such terms in the joint proxy statement/prospectus.
1. The fifth bullet on page 18 of the joint proxy statement/prospectus under the
subsection entitled "Interests of Webster's Directors and Executive Officers
in the Merger" is hereby amended and restated as follows:
· Webster is permitted to take action to provide that the performance goals
applicable to Webster performance equity awards (not including the retention or
synergy awards described above) will be deemed satisfied at the greater of the
target and actual level of performance through the latest practicable date
prior to the effective time as reasonably determined by the compensation
committee of the Webster board of directors.
2. The following disclosure is added to the end of the first paragraph on page 20
and to the end of the last paragraph that begins on page 132 of the joint
proxy statement/prospectus under the subsection entitled "Board of Directors
and Management":
The six additional continuing Sterling directors and the seven additional
continuing Webster directors will be designated prior to closing by the Sterling
board and the Webster board, respectively, with the goal of establishing a
combined board with strong and relevant skills, deep industry knowledge and a
diversity of experiences and backgrounds. The directors of the combined company
will receive compensation for their service as directors. The compensation
received by Webster's directors for 2020 is described in Webster's definitive
proxy statement relating to its 2021 Annual Meeting of Shareholders, which was
filed with the SEC on March 19, 2021, and the compensation received by Webster's
directors for 2021 will be described in Webster's proxy statement relating to
its 2022 Annual Meeting of Shareholders, when available, and in any information
that Webster files with the SEC that updates or supersedes that information.
3. The first paragraph on page 90 of the joint proxy statement/prospectus under
the subsection entitled "Sterling Public Trading Multiples Analysis" is hereby
amended and restated as follows:
For each comparable company, publicly available financial performance through
the twelve (12) months ended December 31, 2020 was measured. With respect to
Sterling and the Sterling selected banks, the information J.P. Morgan presented
included:
· multiple of price to estimated 2022 earnings per share (referred to in this
section as "2022E P/E")?
· a multiple of price to tangible book value per share (referred to in this
section as "P/TBV");
· the estimated 2022 return on average tangible common equity (referred to in
this section as "2022E ROATCE"); and
· a regression analysis (referred to in this section as "P/TBV regression") to
review the relationship between (i) P/TBV and (ii) 2022E ROATCE,
in each case, based on available estimates obtained from public filings, FactSet
Research Systems, and/or Webster management.
Results of the analysis were presented for the selected companies, as indicated
in the following table:
Selected Companies' Median
2022E P/E 13.6 x
P/TBV 1.69 x
2022E ROATCE 12.0 %
4. The following disclosure is added after the first bullet in the subsection
entitled "Sterling Standalone Dividend Discount Analysis" on page 90 of the
joint proxy statement/prospectus:
· a dividend payout ratio of 16.1% for each of 2022 through 2026;
5. The disclosure in the third bullet in the subsection entitled "Sterling
Standalone Dividend Discount Analysis" on page 90 of the joint proxy
statement/prospectus is hereby amended and restated as follows:
· a terminal value based on estimated 2026 net income of $484 million (which was
based on the Sterling forecast), multiplied by a next twelve (12) months price
to earnings ratio (referred to in this section as "NTM P/E") multiple range of
11.0x to 13.0x; and
6. The fifth paragraph on page 91 of the joint proxy statement/prospectus under
the subsection entitled "Webster Public Trading Multiples Analysis" is hereby
amended and restated as follows:
For each comparable company, publicly available financial performance through
the twelve (12) months ended December 31, 2020 was measured. With respect to
Webster and the Webster selected banks, the information J.P. Morgan presented
included:
· 2022E P/E?
· P/TBV;
· 2022E ROATCE; and
· a P/TBV regression to review the relationship between (i) P/TBV and (ii) 2022E
ROATCE,
in each case, based on available estimates obtained from public filings, FactSet
Research Systems, and/or Webster management.
Results of the analysis were presented for the selected companies, as indicated
in the following table:
Selected Companies' Median
2022E P/E 13.4 x
P/TBV 1.69 x
2022E ROATCE 12.0 %
7. The following disclosure is added after the first bullet on page 92 of the
joint proxy statement/prospectus under the subsection entitled "Webster
Standalone Dividend Discount Analysis":
· a dividend payout ratio of 38.9% for each of 2022 through 2026;
8. The disclosure in the third bullet on page 92 of the joint proxy
statement/prospectus under the subsection entitled "Webster Standalone
Dividend Discount Analysis" is hereby amended and restated as follows:
· a terminal value based on estimated 2026 net income of $452 million (which was
based on the Webster forecast), multiplied by a NTM P/E ratio multiple range of
13.0x to 15.0x; and
9. The disclosure in the last paragraph on page 92 of the joint proxy
statement/prospectus under the subsection entitled "Value Creation Analysis"
is hereby amended and restated as follows:
Value Creation Analysis. J.P. Morgan prepared a value creation analysis that
compared the equity value of Webster (each implied by the standalone dividend
discount analysis) to the pro forma implied combined company equity value. J.P.
Morgan determined the pro forma combined company equity value by calculating the
value of (i) the implied equity value of Webster using the midpoint value
determined by J.P. Morgan's standalone dividend discount analysis described
above, plus (ii) the implied equity value of Sterling using the midpoint value
determined in J.P. Morgan's standalone dividend discount analysis described
above, plus (iii) the estimated net present value of post-tax net synergies
(using net synergies and net restructuring charges, each as provided by Webster
management, and a discount rate of 11.25%) (including net of estimated
restructuring charges). The value creation analysis at the exchange ratio of
0.4630 and implied per share equity value of the merger consideration of $26.56
provided for in the proposed merger yielded accretion to the holders of Webster
common stock of 7.4%. There can be no assurance that the synergies and
restructuring charges will not be substantially greater or less than the
estimates described above.
10. The disclosure in the last paragraph on page 101 of the joint proxy
statement/prospectus under the subsection entitled "Pro Forma Transaction
Analysis" is hereby amended and restated as follows:
Piper Sandler analyzed certain potential pro forma effects of the merger on
Webster assuming the merger closes on December 31, 2021. Piper Sandler also
utilized the following information and assumptions: (a) certain internal
financial projections for Webster for the years ending December 31, 2021 through
December 31, 2025, as provided by the senior management of Webster, (b) certain
financial projections, estimated dividends per share and estimated share
repurchases for Sterling for the years ending December 31, 2021 ($0.32 and $213
million, respectively) and December 31, 2022 ($0.36 and $236 million,
respectively), as provided by the senior management of Sterling and authorized
for Piper Sandler's use by the senior management of Webster, as well as certain
financial projections for Sterling for the years ending December 31, 2023
through December 31, 2025, as provided by the senior management of Webster, and
(c) certain assumptions relating to transaction expenses ($245 million pre-tax
and $211 million post-tax), purchase accounting adjustments (a $323 million
gross credit mark, or 1.5% of Sterling's loan portfolio; fair-value marks of a
$58 million write-down of gross loans, a $102 million write-up of securities and
a $21 million write-up of time deposits, subordinated debt and preferred equity;
and a core deposit intangible of 0.50% on Sterling's $21 billion of core
deposits, amortized over ten (10) years using the sum-of-years digits
methodology) and cost savings ($120 million pre-tax, 75% of which are expected
to be realized in 2022, and 100% of which are expected to be realized
thereafter), as well as certain adjustments for CECL accounting standards ($194
million, established through a provision expense, and expected to be accreted
into earnings over four (4) years using the sum-of-years digits methodology) and
the repurchase of a certain number of shares of Webster common stock in the year
ending December 31, 2022, as provided by the senior management of Webster. The
analysis indicated that the merger could be accretive to Webster's estimated
. . .
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This communication may contain certain forward-looking statements, including,
but not limited to, certain plans, expectations, goals, projections, and
statements about the benefits of the proposed transaction, the plans,
objectives, expectations and intentions of Webster and Sterling, the expected
timing of completion of the transaction, and other statements that are not
historical facts. Such statements are subject to numerous assumptions, risks,
and uncertainties. Statements that do not describe historical or current facts,
including statements about beliefs and expectations, are forward-looking
statements. Forward-looking statements may be identified by words such as
expect, anticipate, believe, intend, estimate, plan, target, goal, or similar
expressions, or future or conditional verbs such as will, may, might, should,
would, could, or similar variations. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the Securities Act
of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private
Securities Litigation Reform Act of 1995.
While there is no assurance that any list of risks and uncertainties or risk
factors is complete, below are certain factors which could cause actual results
to differ materially from those contained or implied in the forward-looking
statements: changes in general economic, political, or industry conditions; the
magnitude and duration of the COVID-19 pandemic and its impact on the global
economy and financial market conditions and our business, results of operations,
and financial condition; uncertainty in U.S. fiscal and monetary policy,
including the interest rate policies of the Federal Reserve Board; volatility
and disruptions in global capital and credit markets; movements in interest
rates; reform of LIBOR; competitive pressures on product pricing and services;
success, impact, and timing of our business strategies, including market
acceptance of any new products or services; the nature, extent, timing, and
results of governmental actions, examinations, reviews, reforms, regulations,
and interpretations, including those related to the Dodd-Frank Wall Street
Reform and Consumer Protection Act and the Basel III regulatory capital reforms,
as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the
occurrence of any event, change or other circumstances that could give rise to
the right of one or both of the parties to terminate the merger agreement
between Webster and Sterling; the outcome of any legal proceedings that may be
instituted against Webster or Sterling; delays in completing the transaction;
the failure to obtain necessary regulatory approvals (and the risk that such
approvals may result in the imposition of conditions that could adversely affect
the combined company or the expected benefits of the transaction); the failure
to obtain stockholder approvals or to satisfy any of the other conditions to the
transaction on a timely basis or at all; the possibility that the anticipated
benefits of the transaction are not realized when expected or at all, including
as a result of the impact of, or problems arising from, the integration of the
two companies or as a result of the strength of the economy and competitive
factors in the areas where Webster and Sterling do business; the possibility
that the transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; diversion of management's
attention from ongoing business operations and opportunities; potential adverse
reactions or changes to business or employee relationships, including those
resulting from the announcement or completion of the transaction; the ability to
complete the transaction and integration of Webster and Sterling successfully;
the dilution caused by Webster's issuance of additional shares of its capital
stock in connection with the transaction; and other factors that may affect the
future results of Webster and Sterling. Additional factors that could cause
results to differ materially from those described above can be found in
Webster's Annual Report on Form 10-K for the year ended December 31, 2020, which
is on file with the Securities and Exchange Commission (the "SEC") and available
on Webster's investor relations website, https://webster.gcs-web.com/, under the
heading "Financials" and in other documents Webster files with the SEC, and in
Sterling's Annual Report on Form 10-K for the year ended December 31, 2020,
which is on file with the SEC and available on Sterling's website,
https://sterlingbancorp.com/, under the heading "Financial Information" and in
other documents Sterling files with the SEC.
All forward-looking statements speak only as of the date they are made and are
based on information available at that time. Neither Webster nor Sterling
assumes any obligation to update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking statements
were made or to reflect the occurrence of unanticipated events except as
required by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised against placing
undue reliance on such statements.
IMPORTANT ADDITIONAL INFORMATION
In connection with the proposed transaction, Webster has filed with the SEC a
Registration Statement on Form S-4 that includes a joint proxy statement of
Webster and Sterling and a prospectus of Webster. The registration statement on
Form S-4, as amended, was declared effective by the SEC on July 8, 2021, and
Webster and Sterling mailed the definitive joint proxy statement/prospectus to
their respective stockholders on or about July 8, 2021. The proposed transaction
involving Webster and Sterling will be submitted to Sterling's stockholders and
Webster's stockholders for their consideration on August 17, 2021. This
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or approval, nor shall
there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. INVESTORS AND STOCKHOLDERS
OF WEBSTER AND INVESTORS AND STOCKHOLDERS OF STERLING ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Stockholders can obtain a free copy of the definitive joint proxy
statement/prospectus, as well as other filings containing information about
Webster and Sterling, without charge, at the SEC's website (http://www.sec.gov).
Copies of the joint proxy statement/prospectus and the filings with the SEC
incorporated by reference in the joint proxy statement/prospectus can also be
obtained, without charge, by directing a request to Kristen Manginelli, Director
of Investor Relations, Webster Financial Corporation, 145 Bank Street,
Waterbury, Connecticut 06702, (203) 578-2202 or to Emlen Harmon, Senior Managing
Director, Investor Relations, Sterling Bancorp, Two Blue Hill Plaza, Second
Floor, Pearl River, New York 10965, (845) 369-8040.
PARTICIPANTS IN THE SOLICITATION
Webster, Sterling, and certain of their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
the stockholders of Webster and Sterling in connection with the proposed
transaction under the rules of the SEC. Information regarding Webster's
directors and executive officers is available in its definitive proxy statement
relating to its 2021 Annual Meeting of Shareholders, which was filed with the
SEC on March 19, 2021, and other documents filed by Webster with the SEC.
Information regarding Sterling's directors and executive officers is available
in its definitive proxy statement relating to its 2021 Annual Meeting of
Stockholders, which was filed with the SEC on April 14, 2021, and other
documents filed by Sterling with the SEC. Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, is contained in the joint
proxy statement/prospectus and other relevant materials filed with the SEC. Free
copies of this document may be obtained as described in the preceding paragraph.
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