Company: MCHB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001518715-25-000083
Chunk: 19

Company: Mechanics Bancorp
Filing Date: 2025-05-08
Form: 10-Q
Item: Item 1A
Chunk 19
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 maintain business relationships may experience uncertainty about the Company's future and seek alternative relationships with third parties, seek to alter their business relationships with the Company or fail to extend an existing relationship with the Company; and

•The Company has expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the proposed Merger.

If any of the aforementioned risks were to materialize, they could lead to significant costs or lost opportunities which may impact the Company's results of operations and financial condition. 

The Merger Agreement limits the Company’s ability to pursue alternatives to the Merger and may discourage other companies from trying to acquire the Company.

The Merger Agreement contains “no shop” covenants that restrict the Company’s ability to, directly or indirectly, among other things, initiate, solicit, knowingly encourage or knowingly facilitate, inquiries or proposals with respect to, or, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any alternative acquisition proposals, subject to certain exceptions. These provisions, in addition to a $10 million termination fee payable by the Company under certain circumstances, may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of the Company from considering or making that acquisition proposal.

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Holders of Company common stock will have a substantially reduced ownership and voting interest in the combined company after the consummation of the Merger.

Shareholders of the Company currently have the right to vote in the election of the board of directors and on other matters affecting the Company. When the Merger is completed, each Company shareholder will become a shareholder of the combined company, with a percentage ownership of the shares of common stock of the combined company that is substantially smaller than the holder’s percentage ownership in the Company’s common stock individually prior to the consummation of the Merger. The current Company shareholders are estimated to own approximately 8.3% of the outstanding shares of the combined company on an economic basis and 8.7% of the voting power in the combined company immediately after the merger. Following the consummation of the Merger, a controlling shareholder and its controlled affiliates will control approximately 74.3% of the voting power of the combined company. Accordingly, Company shareholders are expected to have less influence over the management and policies of the combined company after the closing of the Merger than they now have on the management and policies of the Company

Shareholder litigation related to the merger could prevent or delay the completion of the