American National Bankshares Inc. (NasdaqGS:AMNB) entered into an agreement and plan of reorganization to acquire Mainstreet Bankshares Inc. (OTCPK:MREE) from Spence Limited L.P. and others for $24.1 million in cash and stock on August 24, 2014. Under the terms of the agreement, American National will pay 0.482 shares of its common stock and $3.46 in cash for each share of MainStreet. All the option holders will be given shares at an exchange ratio of 0.643. After the close of the transaction, MainStreet shareholders will own approximately 10% of the combined company. Following completion of the merger of MainStreet and American National, MainStreet's subsidiary bank, Franklin Community Bank, will be merged into American National Bank and Trust Company. MainStreet will have to pay a fee of $1 million in case of termination.

Joel R. Shepherd, MainStreet's Board Chairman might join the Board of American National upon completion of the merger. The transaction is subject to regulatory approval, listing of shares on stock exchange, court approval, registration statement effectiveness, dissenters rights limited and MainStreet shareholders approval. The transaction has been approved by Board of both the companies. The transaction is expected to close in the fourth quarter of 2014 or early January 2015. The transaction is expected to be accretive to earnings per share.

Keefe, Bruyette & Woods, Inc. acted as financial advisor and George P. Whitley of LeClairRyan, A Professional Corporation acted as legal advisor for American National. G. Jacob Savage III, David M. Wojdyla, Alex D. Spotts, and David C. Gerstanmaier of BB&T Capital Markets acted as financial advisors and Douglas W. Densmore of CowanPerry PC acted as legal advisor for MainStreet. MainStreet paid a non-refundable retainer of $25,000 to BB&T Capital Markets at the time of engagement, as well as a $100,000 fairness opinion fee which was payable when MainStreet executed the definitive merger agreement. At closing, MainStreet will pay BB&T Capital Markets a contingent advisory fee equal to 1.25% of the effective merger consideration on the effective date of the merger. Regan & Associates, Inc. acted as information agent to MainStreet for a fee of $8,000. Registrar And Transfer Company acted as transfer agent for American National.

American National Bankshares Inc. (NasdaqGS:AMNB) completed the acquisition of Mainstreet Bankshares Inc. (OTCPK:MREE) from Spence Limited L.P. and others on January 1, 2015.