DEFM14A: Mid Penn and William Penn Announce Merger Agreement

Mid Penn Bancorp and William Penn Bancorporation have entered into a merger agreement where William Penn will merge into Mid Penn, pending shareholder and regulatory approvals.

Summary

• Mid Penn Bancorp and William Penn Bancorporation have agreed to a merger where William Penn will merge into Mid Penn.
• William Penn shareholders will receive 0.426 shares of Mid Penn common stock for each share of William Penn common stock they own.
• The maximum number of Mid Penn shares to be issued is estimated at 3,922,700.
• Following the merger, former William Penn shareholders will hold approximately 16.85% of Mid Penn's common stock.
• Special meetings for both Mid Penn and William Penn shareholders to vote on the merger are scheduled for April 2, 2025.
• The merger is expected to close in the second quarter of 2025, subject to customary closing conditions and regulatory approvals.

Sentiment

Score: 7

Explanation: The document is generally positive, outlining the benefits of the merger for both companies and their shareholders. However, it also acknowledges potential risks and uncertainties, resulting in a moderate sentiment score.

Positives

• The Mid Penn board of directors believes that the merger is in the best interests of Mid Penn and its shareholders.
• The William Penn board of directors believes that the merger is in the best interests of William Penn and its shareholders.
• Kenneth J. Stephon, the current Chairman, President and Chief Executive Officer of William Penn, will be appointed as a director of Mid Penn and Mid Penn Bank, Vice Chair of Mid Penn Bank, and Chief Corporate Development Officer of Mid Penn and Mid Penn Bank.

Negatives

• The percentage ownership interest in Mid Penn represented by the existing shares of Mid Penn common stock will be diluted.
• If the merger is not completed, William Penn shareholders will not receive any consideration for their shares of common stock.

Risks

• The market price of both Mid Penn common stock and William Penn common stock will fluctuate before the completion of the merger.
• Under the terms of the merger agreement, if the average price of Mid Penn common stock over a specified period of time decreases below certain specified thresholds, William Penn would have a right to terminate the merger agreement, unless Mid Penn elects to increase the exchange ratio.
• The merger is subject to regulatory approvals, and there is no guarantee that these approvals will be obtained.

Future Outlook

The merger is expected to be completed in the second quarter of 2025, subject to shareholder and regulatory approvals.

Management Comments

• The Mid Penn board of directors has determined that the merger is advisable and in the best interests of Mid Penn and its shareholders.
• The William Penn board of directors has determined that the merger is advisable and in the best interests of William Penn and its shareholders.
• We strongly support this combination of our companies and join with the other members of our boards of directors in enthusiastically recommending that you vote in favor of the merger. Rory G. Ritrievi, President and Chief Executive Officer, Mid Penn Bancorp, Inc.
• We strongly support this combination of our companies and join with the other members of our boards of directors in enthusiastically recommending that you vote in favor of the merger. Kenneth J. Stephon, Chairman, President and Chief Executive Officer, William Penn Bancorporation

Industry Context

This merger reflects a trend of consolidation in the banking industry, where smaller institutions are combining to achieve greater scale and efficiency.

Comparison to Industry Standards

• The document references comparable company analyses performed by Piper Sandler and Keefe, Bruyette & Woods, Inc. to assess the fairness of the exchange ratio.
• These analyses compare William Penn and Mid Penn to peer groups based on financial metrics such as total assets, return on average assets, net interest margin, and price-to-earnings ratios.
• The document also includes an analysis of precedent transactions, comparing the merger to similar bank and thrift transactions in terms of transaction price to tangible book value, core deposit premium, and market premium.

Management Changes

Stakeholder Impact

• Shareholders of William Penn will receive shares of Mid Penn common stock.
• Shareholders of Mid Penn will experience a dilution of their ownership interest.
• Employees of both companies may experience changes in their roles and responsibilities.
• Customers of both banks will have access to a wider range of products and services.

Next Steps

• Mid Penn and William Penn shareholders will vote on the merger agreement at their respective special meetings on April 2, 2025.
• The companies will seek regulatory approvals for the merger.
• If approved, the merger is expected to close in the second quarter of 2025.

Key Dates

Keywords

merger, Mid Penn Bancorp, William Penn Bancorporation, shareholders, common stock, agreement, regulatory approvals, special meeting