By Nicole De Dios and Leo Gatdula, S&P Global Market Intelligence staff writers
Mid Penn Bancorp Inc. will acquire First Priority Financial Corp. in an all-stock deal that exchanges 0.3481 Mid Penn common share for each First Priority common share.
Based on the buyer's 20-day volume-weighted average price of $33.71 as of Jan. 12, the merger is valued at approximately $82 million. All options to buy First Priority stock will be cashed out upon the deal's close.
The deal has a one-day premium of 45.04%, based on the target's Jan. 12 closing price of $9.00. It has a one-month premium of 51.79%, based on the target's closing price of $8.60 on Dec. 18, 2017.
SNL valuations for bank and thrift targets in the mid-Atlantic region between Jan. 16, 2017, and Jan. 16, 2018, averaged 142.45% of book, 147.20% of tangible book and had a median of 30.00x last-12-months earnings, on a per-share basis.
SNL calculates that the deal is 182.4% of book, 194.4% of tangible book and 32.6x earnings, on a per-share basis. It is also 14.79% of assets, 18.09% of deposits and the tangible book premium-to-core deposits ratio is 11.11%.
As of Sept. 30, 2017, Millersburg, Pa.-based Mid Penn Bank had $1.15 billion in assets; Malvern, Pa.-based First Priority Bank had $611.6 million. The combined franchise will have approximately $2.2 billion in assets, $1.8 billion in deposits and $1.6 billion in loans.
SNL data shows that in Pennsylvania, Mid Penn Bancorp will enter Berks County with four branches to be ranked No. 11 with a 1.18% share of about $16.39 billion in total market deposits and will enter Bucks County with one branch to be ranked No. 27 with a 0.27% share of roughly $18.19 billion in total market deposits. Also, it will enter Chester County with one branch to be ranked No. 18 with a 1.24% share of about $14.24 billion in total market deposits and will enter Montgomery County with one branch to be ranked No. 29 with a 0.15% share of approximately $29.20 billion in total market deposits.
The deal is expected to close in the third quarter, with First Priority becoming "First Priority Bank, a division of Mid Penn Bank."
Four First Priority board members will join Mid Penn Bancorp's and Mid Penn Bank's boards. One of them, David Sparks, will also head the new division and become the combined company's chief strategic adviser.
Mid Penn Bancorp calculates that the transaction will be accretive to EPS and that tangible book value dilution will be earned back in less than three years.
Sandler O'Neill & Partners LP and Pillar & Aught served as Mid Penn's financial adviser and legal counsel, respectively. For First Priority, it was Griffin Financial Group LLC and Stevens & Lee PC.
This article originally appeared on S&P Global Market Intelligence’s website on Jan. 16, 2018, under the title, "Mid Penn, First Priority Financial to merge in $82M deal"