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3/18/2016
3:29 PM
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VOL. 37, NO. 12
MARCH 21 - 27, 2016
Business of Life
REAL ESTATE: Making room Energy Focus is tripling size of facility
Book collecting
P. 6
TECHNOLOGY: Inventive LCC
Cleveland library houses some rare gems
SMART building could be business lure
P. 22-23
P. 8-9
CLEVELAND BUSINESS
SOURCE LUNCH Barbara Lum discusses diversity in law P. 24
The List Largest mergers and acquisitions P. 27
FOCUS: MEETING AND EVENT PLANNER
Crain’s and LunaTech 3D team up to take readers on virtual tours of some of the region’s best event spaces, including the Akron Civic Theatre. PAGE 21
Taking long view of Public Square BY JAY MILLER jmiller@crain.com @millerjh
Borrowing a Cleveland Metroparks executive to manage a newly re-energized Public Square was a necessary first step to ensure the 10-acre heart of the city comes to life after its June 1 reopening. But the loan by Cleveland Metroparks of its chief marketing officer, Sanaa Julien, to the Group Plan Commission is only a short-term solution, and the square’s planners have yet to devise a permanent plan to guarantee the area doesn’t return to its neglected past. Last week, the Group Plan Commission, or GPC, the nonprofit that has been guiding the redevelopment of the square, announced that Julien will be on loan for the next year as that organization’s CEO of programming and operations. GPC executive director Jeremy Paris said the commission will pay Julien her
Metroparks annual compensation of $147,635, plus benefits. What happens after that is up in the air. GPC’s chairman, attorney Anthony Coyne, said his group is looking at a number of options. The planning commission was created only to plan, finance and install improvements to the square and the Mall — so it may have a short life span — and Coyne said the commission has rejected the idea of creating a new development corporation to run these public spaces. “I don’t think we have an end date (for the commission), so what we’re doing with Sanaa Julien is making her responsible for the programming and maintenance,” he said. “And we’ve decided to work with a team through the Downtown Cleveland Alliance (for a staff). That really is our business plan to work in that kind of collaborative environment.” The Downtown Cleveland Alliance, or DCA, is funded by SEE PUBLIC SQUARE, PAGE 26
Entire contents © 2016 by Crain Communications Inc.
FirstMerit filings show perks of deal BY JEREMY NOBILE jnobile@crain.com @JeremyNobile
Many investors expected FirstMerit Corp. to be an acquirer, not a seller, but the company seems to have been looking for a buyer as far back as late 2014. Recent corporate filings show that FirstMerit met with three unidentified financial institutions between the last quarter of 2014 and the first quarter of 2015 to gauge interest in a merger. However, none of those suitors bit — or at least weren’t interested in paying a premium based on the company’s market price at the time. During that six-month period, FirstMerit’s stock peaked at $19.60 a share and hit a low of $16.39. But it was in late January that Columbus-based Huntington Bancshares Inc. announced its agreement to acquire Akron-based FirstMerit in a combination cash and stock deal valued at about $3.4 billion, or $8.80 a share, establishing the largest bank in Ohio by market share with about $100 billion in assets. Consolidation is hot in banking right now as companies generally view acquisitive growth as a way to stay competitive and offset the rising costs of doing business. The Huntington and FirstMerit
deal was announced just months after Cleveland’s KeyCorp said it was planning to acquire New York’s First Niagara Financial Group in a $4.1 billion deal of its own last fall. Huntington’s acquisition helps it gobble up market share, punctuating an increasingly dominant presence in the Midwest. But these deals also reinforce that size matters, and the trend of consolidation will only persist. FirstMerit, after all, really didn’t need to sell to remain viable and relevant. The bank has been profitable, its stock is liquid and the company is already large enough that the rising costs of doing business shouldn’t be overly difficult to absorb. “This just shows that scale is very important in this industry,” said Ben Mackovack, managing member at Strategic Value Bank Partners in Beachwood, a bank investment fund. “And it’s significant that this region has seen two very large bank deals in the past several months: You have Huntington and (KeyCorp) both getting bigger. It suggests the trend of consolidation within the banking industry is going to continue for the foreseeable future.”
Inside the deal It was May 2015 when Huntington initially showed interest in
FirstMerit, according to the filings, informally proposing a stock-forstock deal. FirstMerit directors ended up turning down the first formal proposal by Huntington: a 100% stock deal representing a 22% premium over FirstMerit stock valued at $19.65 a share. So FirstMerit CEO Paul Greig met with another separate, unidentified institution in mid-September. But that didn’t go anywhere. Negotiations continued a couple months. Huntington made another similar offer, marking a 22% premium over FirstMerit’s stock price in November. But it was December when Huntington first offered a deal mixing Huntington stock with up to 20% cash. That offer, which represented a 24% premium over FirstMerit’s stock value, also included the placement of four FirstMerit directors to the Huntington board instead of the three originally offered in early proposals. That offer also established the $25 million commitment by Huntington to Ohio’s Akron and Canton communities and Flint, Mich., in addition to a $30 million retention pool for employees of FirstMerit to help incentivize their staying with the SEE FIRSTMERIT, PAGE 26