Even though Rabobank did not end up acquiring Farm Credit Services of America (FCS of America), they'll end up $10 million richer when everything is said and done.
On October 21, 2004, FCSAmerica notified Rabobank of the decision by its board of directors to terminate the Merger Agreement. As part of the settlement, FCSAmerica has agreed to pay Rabobank four installments of $2.5 million over the next year.
The two firms agreed to this settlement amount in order to achieve an efficient and mutually satisfactory resolution of the Merger Agreement, including the applicability of provisions providing for a termination fee and expense reimbursement of $13.5 million payable by FCSAmerica in certain circumstances.
Paul Folkerts, chairman of the FCSAmerica board of directors, says the company believes that "unprecedented activities during the 'quiet period' of the process" interfered with completing the merger. He adds that the settlement allows the company to move forward in securing leadership for the company, which is looking for a new CEO since the former CEO Jack Webster resigned.
Rabobank does not intend to disappear from the rural American lending scene. Cor Broekhuyse, head of the Americas for Rabobank International, explains although the company is disappointed the acquisition was terminated, Rabobank remains committed to increasing its investment in the U.S. market.