Item 1.01 Entry Into a Material Definitive Agreement.
On April 11, 2017, Washington Federal, Inc., a Washington corporation ("Washington Federal"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Anchor Bancorp, a Washington corporation ("Anchor"). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Anchor will merge with and into Washington Federal (the "Merger"), with Washington Federal as the surviving corporation in the Merger. Immediately after the effective time of the Merger (the "Effective Time"), Washington Federal intends to merge Anchor Bank, a wholly-owned subsidiary of Anchor, with and into Washington Federal, National Association, a wholly-owned subsidiary of Washington Federal (the "Bank Merger"), with Washington Federal, National Association as the surviving institution in the Bank Merger.
Subject to the terms and conditions of the Merger Agreement, at the Effective Time, each share of the common stock of Anchor outstanding immediately prior to the Effective Time will be converted into the right to receive a fraction of a share of the common stock of Washington Federal. The Washington Federal shares issued will have an aggregate value of approximately $63.9 million. Each share of Anchor common stock was valued at $25.75. The exact number of shares to be issued and the exchange ratio will be determined based upon the average of the volume-weighted price of Washington Federal common stock for the twenty (20) trading days ending on the fifth trading day immediately preceding the closing date, subject to a negotiated collar. All unvested Anchor restricted stock awards outstanding immediately prior to the Effective Time will become fully vested and will be converted into a right to receive the merger consideration described immediately above, as provided in the Merger Agreement.
The Merger Agreement contains customary representations and warranties from both Washington Federal and Anchor, and each party has agreed to customary covenants, including, among others, covenants relating to (1) the conduct of its business during the interim period between the execution of the Merger Agreement and the Effective Time, including, in the case of Anchor, specific forbearances with respect to its business activities, (2) Anchor's obligation to call a meeting of its shareholders to approve the Merger Agreement, and, subject to certain exceptions, that its board of directors recommend that Anchor shareholders vote to approve the Merger Agreement, and (3) Anchor's non-solicitation obligations regarding alternative acquisition proposals.
The completion of the Merger is subject to customary conditions, including approval of the Merger Agreement by Anchor's shareholders and the receipt of required regulatory approvals. The Merger is expected to be completed in the third calendar quarter of 2017.
The Merger Agreement provides certain termination rights for both Washington Federal and Anchor and further provides that a termination fee of $2,236,500 will be payable by Anchor upon termination of the Merger Agreement under certain circumstances.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached
hereto as Exhibit 2.1 and is incorporated herein by reference. The representations, warranties and covenants of each party set forth in the Merger Agreement have been made only for purposes of, and were and are solely for the benefit of the parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other time, and investors should not rely on them as statements of fact. In addition, such representations and warranties (1) will not survive the consummation of the Merger, unless otherwise specified therein, and (2) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties' public disclosures. Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding Washington Federal or Anchor, their respective affiliates or their respective businesses. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding Washington Federal, Anchor, their respective affiliates or their respective businesses, the Merger Agreement and the Merger that will be contained in, or incorporated by reference into, the Registration Statement on Form S-4 that will include a proxy statement/prospectus, as well as in the Forms 10-K, Forms 10-Q and other documents that each of Washington Federal and Anchor file with or furnish to the Securities and Exchange Commission ("SEC").
Each director of Anchor has executed a voting agreement with Washington Federal pursuant to which the director has agreed to vote his or her shares of Anchor common stock in favor of the Merger Agreement. Each director of Anchor also has executed a resignation, non-solicitation and confidentiality agreement with Washington Federal.