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Ohio Art (OART) sent out a notice regarding a 1:2,300 reverse split (squeese out) that will cash out smaller shareholders at $10.05. The announcement says that controlling shareholders (the Killgallon family) control enough stock to push it through.
The announcement does not have 2020 financial statements, and OART reports only annually. Given the lack of disclosure and the price where the stock was trading prior to the announcement, we consider this split potentially abusive.
One investor reaction on Twitter:
I can't say it enough. Don't invest in micro-caps run by crooks. The Ohio Art Company $OART (the inventor of the Etch A Sketch) is cashing out holders of fewer than 2,300 shares at $10.05 per share.— Dave Waters (@alluvialcapital) February 23, 2021
The last trade was $15.25.
Based on the financial results as of December 31, 2020, the combined company would have pro forma total assets of approximately $2.05 billion, total deposits of approximately $1.8 billion, and loans of approximately $1.4 billion.
Once the merger is complete, Fidelity will have 25 retail community banking offices in Northeast and Eastern Pennsylvania, offering a complete range of consumer and business products, including wealth management. Its Customer Care Center is open 7 days a week for the convenience of its clients. Additionally, Fidelity Bank offers the ability for its clients to apply for consumer deposits, real estate loans, and personal loans through its robust online application processes.
Landmark shareholders will receive 0.272 shares of Fidelity common stock and $3.26 in cash for each share of Landmark common stock that they own as of the closing date.
Based on Fidelity’s 10-day average closing price at February 25, 2021 of $55.00, the transaction is valued at $43.4 million or $18.22 per share. The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes.
As of December 31, 2020, Landmark had total assets of $354 million, total deposits of $287 million and total loans of $280 million.
Acquirer FDBC is paying mostly stock with some cash, valued at $42 million with acquirer stock down 6% on Friday. That is 1.17x the year-end 2020 book value of target LDKB, which earned 4% on equity last year and had assets of $354 million.
Both banks are in the Scranton area.
Target stock was offered on Friday at a 1.7% deal spread.
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