A well-known activist investor is playing a major role in the planned merger of similar sized banks in New Jersey.

Lawrence Seidman helped break the ice between Center Bancorp (CNBC) in Union, N.J., and ConnectOne Bancorp (CNOB) in Englewood Cliffs, N.J., according to a filing tied to the $243 million merger announced in January. Seidman, who also agreed to sell more than 2.3 million shares of Center's stock as part of the merger, will also receive $100,000 as part of a two-year consulting agreement.

Seidman, a Center director for the last seven years, and Don Musso at FinPro, which eventually served as an advisor to the $1.3 billion-asset ConnectOne, last summer arranged a face-to-face meeting between Frank Sorrentino 3rd, ConnectOne's chief executive, and Anthony Weagley, Center's CEO. The executives met for lunch on July 29, the filing said.

Sorrentino also met with Seidman. The activist investor, along with Weagley, also spoke "frequently" with Center's investment bank, Keefe, Bruyette & Woods, the filing said.

Center started talking to ConnectOne after discussions with another unnamed bank fell through. The filing disclosed that the $1.7 billion-asset Center was in talks to sell itself to "a substantially larger entity" during the spring and early summer of 2013. "Center's willingness to entertain the prior unconsummated transaction evidenced the willingness of the Center board and management to consider a variety of alternatives for maximizing shareholder value," the filing added.

The background section of the regulatory filing in many ways reads like the liner notes of a record album, name checking virtually everyone involved with the deal. It identifies Ben Plotkin as the representative at Keefe, Bruyette & Woods. The filing also identifies Peter Ehrenberg at Lowenstein Sandler as the lawyer who represented Center and Robert Schwartz at Windels, Marx, Lane & Mittendorf as the lawyer for ConnectOne.

The filing also notes that the top roles were initially sketched out in a September term sheet drafted by Plotkin. Sorrentino was penciled in to become chairman and CEO, while Weagley was the proposed president and chief operating officer. (Sorrentino eventually obtained the president's title by the time the deal was announced on Jan. 21.)

Plotkin's term sheet also contemplated that Seidman and his associates would lower their ownership in the surviving company to less than 10% within a year after the deal's closing. Seidman holds about 24% of Center's common stock, according to the company's recent proxy statement.

Seidman eventually reached an agreement to "use commercially reasonable efforts" to reduce his ownership in the new company to no more than 4.99% within a year of closing, which could require him to shed more than 2.3 million shares of Center stock.

The surviving company also has the right to buy back Seidman's excess shares within 45 days of the deal's closure at a price of $20.63 a share. Finally, the board of the new company also secured the right to vote all of Seidman's shares that are in excess of 4.99% starting six months after the deal is completed.

The company also agreed to pay Seidman $50,000 a year as part of a two-year consulting agreement. As part of that deal, Seidman agreed that he will not solicit any customers of Center or ConnectOne to take their business to other financial institutions.

Seidman has large stakes in a number of banks, including OBA Financial Services (OBAF) in Germantown, Md., which agreed last month to sell to F.N.B. Corp. (FNB) in Hermitage, Pa.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.