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KleinBank Agrees to $434M Merger with Old National
Members of the KleinBank family, which for four generations has led the Chaska-based banking organization.

KleinBank Agrees to $434M Merger with Old National

The deal will double Old National’s presense in Minnesota, a market it entered less than a year ago after having purchased local community bank Anchor Bank.

Old National Bancorp, the Midwestern banking system that late last year entered the Minnesota market by acquiring Anchor Bank, has made it’s a second acquisition that will double its presence in the state.
 
KleinBank, the 111-year-old, family-owned community bank out of Chaska, said Thursday it had agreed to sell to Old National through a 100 percent stock merger deal.
 
Owners of KleinBank shares will receive 7.92 shares of Old National common stock for every share of Klein common stock they own. The deal, based on Old National’s closing share price of $19.05 on Wednesday, brings the deals value to $433.8 million.
 
Boards from both companies unanimously approved the transaction. While still subject to customary closing conditions and regulatory approval, the deal is expected to officially close in the last few months of 2018.
 
Until that time, KleinBank will keep its name and continue its operations as is. Assuming the deal closes, the bank’s 18 locations will receive new signage and begin to operate within the Old National system.
 
“The addition of Klein’s powerful retail franchise, as evidenced by their low loan to deposit ratio… complement the already-excellent commercial team and strong performance that we have seen to date at our recently completed Anchor Bank partnership,” said Old National CEO Bob Jones in a statement. “We believe the enhanced scale, product capability, and market coverage that this combination creates positions us exceptionally well in the Twin Cities — a market that remains economically vibrant with unique competitive dynamics that play into the strengths of our business model.”
 
The acquisition will bring Old National’s branch count up to 35. Before the deal, Old National’s Minnesota presence was made up entirely of former locations of Anchor Bank, which it bought for roughly $303 million.
 
“We have a lot of friends and colleagues at Anchor Bank,” KleinBank CEO Doug Hile tells Twin Cities Business. “We think the two of us combined together is going to create a dream team in the Twin Cities that will be able to compete with banks large and small. The future for this organization is extraordinarily bright.”
 
According to Hile, the offer for KleinBank—one of Minnesota’s largest community banks with $2 billion in assets—came just months after Old National’s Anchor acquisition closed.
 
“We had been looking for opportunities to expand,” he says, “and we were strategically mapping out how we could grow and what we would need to grow. As we began that discussion with the family [early in 2018], we considered a lot of different options. One of them was to find a partner that had significant resources, particularly capital, that might be interested in helping us expand.”
 
The two companies first met face-to-face in April and then inked a deal weeks later. Shared cultures and goals helped the deal-making process move along swiftly, says Hile. “And Old National saw that this will be their largest market by some measure,” he adds.
 
The transition, if the sale closes, should be “silky smooth” for both customers and KleinBank’s more than 400 employees, according to Hile. Matt Klein, who is KleinBank’s president and the eldest member of the fourth-generation Klein family, is expected to take a senior leadership position within Old National. Other family members, Hile says, will make similar transitions, although those what those roles will be are still being finalized.
 
“The plan now is to keep investing and keep building,” says Hile, “and becoming a bigger and more impactful presence in what is a terrific market.”
 
Shares of Old National fell a dime in trading on Thursday to $18.95 a share.