The deal was structured as an all-stock transaction. Each share of William Penn common stock was converted into the right to receive 0.426 shares of Mid Penn common stock, with cash paid in lieu of fractional shares. At announcement on November 1, 2024, based on Mid Penn's October 30, 2024 closing stock price of $31.88, the implied value was approximately $13.58 per William Penn share, or approximately $127 million in the aggregate. By the time Piper Sandler rendered its fairness opinion on October 31, 2024, the firm calculated an aggregate implied transaction value of approximately $128.45 million and an implied price of $13.68 per William Penn share, based on 9,208,217 shares outstanding (including restricted stock awards) and 1,264,000 options with a weighted-average exercise price of $11.71. At closing, Mid Penn issued approximately 3,601,407 shares of common stock to William Penn shareholders, plus up to an additional 538,464 shares issuable upon exercise of assumed former William Penn stock options; the completed deal was ultimately described by the company as valued at approximately $120 million. William Penn's options were converted into Mid Penn equivalent options using the same 0.426 exchange ratio, with exercise prices adjusted accordingly.
On valuation multiples, Piper Sandler's fairness-opinion analysis calculated the transaction price per share at 102% of William Penn's tangible book value per share, a 1.0% tangible book premium to core deposits (deposits excluding CDs over $100,000), and a 7.3% premium to William Penn's October 29, 2024 closing market price. Price-to-earnings multiples were deemed "not meaningful" (NM, defined as a multiple above 40.0x or below 0.0x) because William Penn's trailing and projected earnings were minimal to negative at the time. In a comparison against a nationwide group of 15 bank and thrift transactions announced between January 1, 2023 and October 29, 2024 with target assets of $500 million to $5.0 billion, the Mid Penn/William Penn deal's 102% price-to-tangible-book multiple compared to a peer-group median of 108% (mean 106%, range 31%-171%), and its 7.3% one-day market premium compared to a median of 39.6% (mean 38.4%) for the precedent group. Piper Sandler's pro forma transaction analysis, assuming a June 30, 2025 close, concluded the merger could be accretive to Mid Penn's estimated earnings per share (excluding one-time transaction costs) for 2025 through 2027, while being dilutive to Mid Penn's estimated tangible book value per share at close and in 2025 and 2026, turning accretive to tangible book value in 2027; no specific accretion/dilution percentages were disclosed in the sections reviewed. The joint proxy statement/prospectus separately disclosed Mid Penn's after-tax estimated merger-related charges of $9.3 million, reflected as an adjustment to the pro forma balance sheet. The pro forma financial statements explicitly excluded any dollar estimate of anticipated cost savings or revenue enhancements; the filing discusses expected cost savings and synergies only in qualitative terms (e.g., consolidating personnel, benefits plans, premises, and systems), without a disclosed dollar figure, percentage of expense base, or phase-in schedule.
At announcement, William Penn operated 12 branches across Pennsylvania and New Jersey from its Bristol, PA headquarters, with approximately $812 million in total assets, $465 million in total loans, and $630 million in total deposits as of September 30, 2024. Mid Penn had approximately $5 billion in total assets at announcement. The combined company was expected to have approximately $6.3 billion in total assets, $4.9 billion in total loans, and $5.3 billion in total deposits based on September 30, 2024 data; the actual combined company had approximately $6.3 billion in total assets at closing. Concurrent with the merger announcement, and independent of the merger's completion, Mid Penn also priced a public common stock offering (initially sized at approximately $50 million, later increased to approximately $75 million base amount), ultimately raising approximately $76.5 million of net proceeds through the November 5, 2024 issuance of 2,731,250 shares at $29.50 per share, to support capital levels, commercial real estate concentration ratios, and future growth; the merger's closing was not contingent on completion of the offering.
Mid Penn Chair, President and CEO Rory G. Ritrievi said the combination would "bolster Mid Penn's presence in the attractive greater Philadelphia metro area market, aligning with our strategic plan of disciplined growth in the southeastern region of Pennsylvania and the southern region of New Jersey." William Penn Chairman, President and CEO Kenneth J. Stephon said the merger "allows our shareholders to participate in a fabulous long-term growth opportunity while also providing them with immediate value" and would let William Penn "accelerate our growth far more rapidly than we could as an independent company." Upon closing, Stephon joined Mid Penn's and Mid Penn Bank's boards of directors, became Vice Chairman of Mid Penn Bank, and was named Chief Corporate Development Officer of both Mid Penn and Mid Penn Bank under a new three-year employment agreement providing a $400,000 annual base salary, a $900,000 retention bonus payable in three annual installments, and an annual $50,000 deferred-compensation contribution; the joint proxy statement/prospectus separately disclosed a one-time cash bonus of $2,074,776 payable to Stephon immediately prior to closing. William Penn's remaining non-employee directors were offered paid three-year terms on a Mid Penn Bank advisory board.
The joint proxy statement/prospectus (Form S-4, File No. 333-284342, declared effective February 7, 2025) disclosed that William Penn ran a multi-party sale process beginning in early 2024: its board, advised by Piper Sandler, rejected an approach from "Company A" at an implied $9.00 per share as inadequate, then had Piper Sandler solicit seven potential acquirers (including Mid Penn) under a confidential information memorandum. Of those, five signed confidentiality agreements, and four (Mid Penn, and "Company B," "Company D," and "Company E") submitted non-binding indications of interest in August 2024, ranging from $10.43 to $12.80 implied value per share; Mid Penn's initial indication implied $11.87 per share at the 0.426 exchange ratio. William Penn's board rejected Company B (whose stock traded at a premium to peers but with a newer, less-experienced management team and no presence in William Penn's market) and Company E (inadequate price), and Company D later withdrew for unrelated reasons, leaving Mid Penn as the remaining bidder; William Penn and Mid Penn signed an exclusivity agreement on September 11, 2024, running to November 4, 2024. Piper Sandler delivered its fairness opinion to William Penn's board and KBW delivered its fairness opinion to Mid Penn's board, both dated October 31, 2024, the date the merger agreement was executed. Piper Sandler's fee for advising William Penn was contingent on closing and equal to 1.25% of the aggregate purchase price (approximately $1.6 million at announcement), with a $250,000 opinion fee credited against that amount.
The merger agreement, filed as Exhibit 2.1 to Mid Penn's November 1, 2024 Form 8-K, provided for a termination fee of $4,900,000 payable by William Penn to Mid Penn under certain circumstances, including if William Penn's board changed its recommendation or accepted a superior proposal. Closing conditions included approval by both companies' shareholders, effectiveness of Mid Penn's Form S-4 registration statement, Nasdaq listing approval for the shares to be issued, receipt of required bank regulatory approvals without materially adverse conditions, and customary bring-down of representations and warranties, alongside receipt by each party of a tax opinion that the merger would qualify as a reorganization under Section 368(a) of the Internal Revenue Code. Directors and executive officers of both companies representing approximately 9.2% of William Penn's and 8.9% of Mid Penn's outstanding shares signed affiliate/voting letters agreeing to vote in favor of the transaction. Beginning January 20, 2025, certain purported William Penn shareholders sent demand letters alleging disclosure deficiencies in the Form S-4; neither company believed any resulting demands or litigation would have a material adverse effect on its financial position.