Camp Hill, Pa.-based LINKBANCORP Inc., the parent company of LINKBANK, and Salisbury, Md.-based Partners Bancorp, the parent company of Bank of Delmarva and Virginia Partners Bank, will combine in an all-stock transaction expected to close in the third quarter.
The transaction is valued at about $167.8 million, based on LINKBANCORP's 10-day volume-weighted average price of $8.08 as of Feb. 21.
Under the merger agreement, Partners shareholders will receive 1.15 shares of LINKBANCORP's stock for each Partners share they own. Upon completion of the deal, Partners shareholders will own about 56% of the combined company, and LINKBANCORP shareholders will own about 44%. In connection with the transaction, LINKBANCORP completed a private placement common stock offering resulting in $10 million in gross proceeds.
The combined organization will be a mid-Atlantic community banking franchise with nearly $3 billion in assets and an expected market capitalization of over $300 million. The combined bank holding company will operate under the LINKBANCORP Inc. name and will trade under the ticker symbol LNKB on the Nasdaq Stock Market. Partners' subsidiary banks will merge with and into LINKBANK, and the combined bank subsidiary will operate as LINKBANK.
The corporate headquarters of the combined bank holding company and combined bank entity will be in Camp Hill. The combined company will retain a major operating presence in Salisbury, Md., and Fredericksburg, Va.
LINKBANCORP will enter Delaware with four branches to be ranked No. 19 with a 0.06% share of approximately $473.68 billion in total market deposits; will enter Maryland with 10 branches to be ranked No. 29 with a 0.29% share of approximately $208.68 billion in total market deposits; will enter New Jersey with three branches to be ranked No. 75 with a 0.03% share of approximately $463.19 billion in total market deposits; and will enter Virginia with four branches to be ranked No. 54 with a 0.13% share of approximately $380.92 billion in total market deposits.
S&P Global Market Intelligence valuations for bank and thrift targets in the Mid-Atlantic region between Feb. 22, 2022, and Feb. 22, 2023, averaged 121.80% of book and 129.73% of tangible book and had a median of 14.82x last-12-months earnings, on an aggregate basis, and averaged 122.66% of book and 131.59% of tangible book and had a median of 13.97x last-12-months earnings, on a per-share basis.
At the announcement, S&P Global Market Intelligence calculates the deal value to be 121.11% of common equity, 132.30% of tangible common equity, 11.05% of deposits, 9.75% of assets and 14.66x earnings. The tangible book premium-to-deposits ratio is 2.69%.
The board of the combined company will have 22 directors, comprising 12 directors from LINKBANCORP and 10 directors from Partners.
LINKBANCORP Chairman Joseph Michetti Jr. will become chairman of the combined company's board. Partners Chairman Jeffery Turner will serve as vice chairman of the combined company's board until September 2024, when he will be appointed chairman of LINKBANCORP.
The combined company will operate under LINKBANCORP's regional-focused business model, with Partners executives leading the Delmarva/Maryland, Northern Virginia and Fredericksburg regions for the combined entity.
Andrew Samuel, LINKBANCORP's CEO and vice chairman, will become CEO of the combined company. The pro forma leadership team also includes Carl Lundblad as president, Kristofer Paul as CFO, Brent Smith as LINKBANK president, Tiffanie Horton as chief credit officer and Dee Bonora as chief technology officer.
Partners President and CEO John Breda will become CEO of the Delmarva market. Adam Nalls and David Talebian will be CEO and president of the Northern Virginia market, respectively. Wallace King will be president of the Greater Fredericksburg market.
The transaction is expected to result in GAAP EPS accretion of more than 23% in 2024 for LINKBANCORP and over 50% GAAP EPS accretion in 2024 for Partners. It is also anticipated to be 115% accretive to Partners' current cash dividends per share.
The earnback period of GAAP tangible book value dilution to LINKBANCORP is expected to be 2.7 years. The earnback period of tangible book value dilution, excluding accumulated other comprehensive income/interest rate marks, to the company is projected to be 0.6 years.
The merger agreement provides that a termination fee of $6.5 million will be payable by either LINKBANCORP or Partners, as applicable, upon termination of the deal under certain circumstances.
Stephens Inc. is the exclusive financial adviser to LINKBANCORP and rendered a fairness opinion to the board of the company. Luse Gorman PC is legal adviser to LINKBANCORP.
Piper Sandler & Co. is the exclusive financial adviser to Partners and rendered a fairness opinion to the company's board. Troutman Pepper Hamilton Sanders LLP is legal adviser to Partners.
