Naugatuck Valley Financial Corp. in Naugatuck, Conn., has amended its merger agreement with Southern Connecticut Bancorp Inc. in New Haven, blaming weakened stock market conditions.
The $563.1 million-asset Naugatuck said Friday that the changes would entitle Southern Connecticut shareholders to $6.75 a share in the transaction, rather than the $7.25 the companies agreed on in February. They would allow 60% of Southern Connecticut's outstanding shares to be exchanged for Naugatuck Valley shares, up from 50%. The amendment also extends the deadline for closing the transaction from Feb. 28 to March 30, 2011.
The deal hinges on Naugatuck's completing its mutual-to-stock conversion, for which it has not obtained regulatory approval. The revised agreement would require the buyer to pay a $350,000 termination fee to Southern Connecticut if it fails to obtain the approval, and thus can't complete the merger.
Under the new terms, Southern Connecticut chairman Elmer Laydon and vice chairman Alphonse Sparado Jr. would join Naugatuck's board of directors after acquisition is completed for a three-year term.
The companies said in a press release that they are committed to completing the transaction, and believe the new pricing will bolster the financial strength and capital levels of the combined company.