Millersburg, Pa.-based Mid Penn Bancorp Inc. will acquire Harrisburg, Pa.-based Riverview Financial Corp. in an all-stock transaction valued at about $124.7 million, based on Mid Penn's closing stock price of $27.47 for the trading day ending June 29.
Under the terms of the merger agreement, Riverview shareholders will receive 0.4833 Mid Penn common share for each Riverview common share they own. All options to purchase Riverview common stock will be cashed out at the completion of the deal.
At announcement, S&P Global Market Intelligence calculates the deal value to be 125.85% of common equity, 128.17% of tangible common equity, 9.06% of assets and 11.53% of deposits. The tangible book premium to core deposits ratio is 2.79%.
S&P Global Market Intelligence valuations for bank and thrift targets in the mid-Atlantic region between June 30, 2020, and June 30, 2021, averaged 118.65% of book and 137.47% of tangible book and had a median of 22.09x last-12-months earnings, on a per-share basis.
The transaction is intended to be eligible as a reorganization for federal income tax purposes. As a result, the receipt of Mid Penn common stock by shareholders of Riverview is expected to be tax-free.
The deal, unanimously approved by the boards of both companies, will enhance Mid Penn's footprint throughout central Pennsylvania. In addition to providing entry into the growing Lehigh Valley and State College markets, the combination provides access to attractive core deposit funding markets including the Clearfield and Altoona geographies in western Pennsylvania.
The merger will form a combined community banking franchise with roughly $4.8 billion in assets, $3.7 billion in deposits and $3.7 billion in loans. Following the merger, Mid Penn will be the sixth-largest Pennsylvania-based bank under $10 billion and will keep its position as the top-ranked community bank by deposit market share in the Harrisburg metropolitan statistical area, according to a June 30 news release.
Based on S&P Global Market Intelligence data, with the completion of the deal, Mid Penn will expand in Pennsylvania by 26 branches to be ranked No. 23 with a 0.67% share of about $501.24 billion in total market deposits.
The merger is expected to close in the fourth quarter, subject to customary closing conditions, including the receipt of regulatory approvals and Mid Penn and Riverview shareholder approvals. Following completion of the transaction, Riverview subsidiary Riverview Bank will be merged with and into Mid Penn unit Mid Penn Bank. Additionally, two Riverview directors will join the board of Mid Penn.
The merger agreement provides that, upon termination of the deal under certain circumstances, Riverview may be obligated to pay Mid Penn a termination fee of $5.07 million, according to a filing.
Piper Sandler & Co. acted as financial adviser to Mid Penn in relation to the transaction and Stephens Inc. rendered a fairness opinion to Mid Penn's board. Pillar+Aught served as legal adviser to Mid Penn in the transaction.
Janney Montgomery Scott LLC served as financial adviser to Riverview and rendered a fairness opinion to the Riverview board. Luse Gorman PC acted as legal adviser to Riverview.
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