Mid Penn (MPB) Agrees to Acquire Brunswick for $53.9 Million
Mid Penn Bancorp, Inc. MPB has entered into an agreement to acquire Brunswick Bancorp in a stock-cum-cash deal worth $53.9 million. Following the deal closure, Brunswick Bank will be merged with and into Mid Penn Bank. The completion of the deal, expected in the second quarter of 2023, is subject to customary closing conditions, including the receipt of regulatory approvals and Mid Penn and Brunswick shareholder approvals.
The acquisition is expected to help MPB expand its footprint into the attractive central New Jersey market. Once the deal is closed, Mid Penn will add five total financial centers, four in Middlesex County and one in Monmouth County.
As of Sep 30, 2022, Brunswick had $381.6 million in assets, $279.8 million in deposits and $302.5 million in gross loans.
The merger will create a combined community banking franchise with $5 billion in assets, $4.2 billion in deposits and $3.8 billion in gross loans.
Deal Details
Per the agreement, 50% of Brunswick shares will be converted into Mid Penn common stock while the remaining 50% will be exchanged for cash.
Brunswick shareholders have the option to elect to receive either 0.598 shares of Mid Penn common stock or $18 in cash for each of their shares held, subject to proration to ensure that 50% of the transaction consideration will be paid in the form of Mid Penn common stock.
The purchase price is subject to adjustments in the event Brunswick does not meet certain minimum shareholder equity covenants. All options to purchase Brunswick common stock will be cashed out upon the completion of the merger.
The transaction will qualify as a reorganization for federal income tax purposes and thus, the receipt of Mid Penn common stock by Brunswick shareholders is expected to be tax-free.
Management Comments
Mid Penn’s president and CEO, Rory G. Ritrievi, said, “We are enthusiastic to partner with Brunswick as our first formal step into the dynamic central New Jersey community. Brunswick, under the direction of Executive Chair Frank Gumina, President and CEO Nick Frungillo, Jr. and their strong staff of professionals, has built a solid reputation as a dependable bank for the numerous businesses and consumers in the communities they serve. We feel confident that this combination will, in a very short period of time, create one of the most dynamic and organically growth-oriented financial institutions in that region.”
Frungillo stated, “Mid Penn is an excellent cultural fit for Brunswick, and the opportunity to join a like-minded, top-tier community bank is one that will provide both organizations with significant growth potential. Together we will continue to provide our clients with valuable opportunities via higher lending limits and a sophisticated technology platform. We are pleased to continue providing service to our valued customers and to the communities in which we live, alongside Rory and his team.”
Over the past six months, shares of Mid Penn have gained 15.8% against a decline of 3.2% recorded by the industry.
Image Source: Zacks Investment Research
Currently, Mid Penn sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inorganic Growth Efforts by Other Firms
Recently, F.N.B. Corporation FNB completed the acquisition of Greenville, SC-based UB Bancorp. UB Bancorp's bank subsidiary, Union Bank, merged with FNB's bank subsidiary, First National Bank of Pennsylvania. The acquisition has bolstered FNB’s presence in North Carolina and added “low-cost granular deposits,” which will likely be accretive to its financials amid the present economic backdrop.
Similarly, New York Community Bancorp, Inc. NYCB closed the acquisition of Flagstar Bancorp, Inc. With this, the combined entity becomes the 24th largest regional bank (based on total assets) in the country.
Per NYCB management, “The merger creates a company with significant scale and capabilities with a more diversified loan portfolio, an improved funding mix, and a much better interest-rate risk profile."
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