Brunswick Bancorp in New Brunswick, N.J., considered six offers before agreeing to negotiate exclusively with Mid Penn Bancorp in Harrisburg, Pa.
The $4.3 billion-asset Mid Penn agreed to buy the $382 million-asset Brunswick on Dec. 20 for $53.9 million.
Brunswick’s search for a buyer began in 2021 when it “engaged in substantial discussions” with two banks, according to a regulatory filing tied to the pending sale to Mid Penn. One proposed deal would have been an outright sale; the other was characterized as a merger of equals.
Each of the discussions fell through after the other parties conducted due diligence.
Brunswick formed a strategic planning committee last June to oversee the sales process. The committee authorized its advisors to contact 18 potential acquirers with assets ranging from $650 million to $10 billion. Four other banks with $1.5 billion to $4.7 billion of assets also expressed an interest.
Fifteen potential suitors signed nondisclosure agreements to receive confidential information and access to a virtual data room. Six of them, including Mid Penn, submitted preliminary indications of valuation by Brunswick’s mid-August deadline.
The offers ranged from $16.75 to $19.57 a share, with Mid Penn proposing $17.50 to $18 a share. Brunswick’s committee invited the three parties with the highest offers, along with Mid Penn, to conduct more due diligence and update their proposals by early October.
Mid Penn confirmed that its indicated valuation was $18 a share.
The party that submitted the highest proposed offer withdrew from the process in early October. The other parties submitted new offers ranging from $16.75 to $18.27 a share.
Brunswick decided to deal exclusively with Mid Penn based on a belief that its offer “represented the highest value” and Mid Penn’s experience with acquisitions. One of the other bidders was unwilling to conduct a more-detailed review of Brunswick’s loan book without exclusivity, which “increased the execution risk for that indication,” the filing said.
Mid Penn and Brunswick signed a 45-day exclusivity agreement on Oct. 19. They would later extend it through Dec. 31.
The first draft of the merger agreement was shares on Nov. 11. Both boards approved the deal on Dec. 20 and it was announced later that day. The deal, which is expected to close in the second quarter, priced Brunswick at 120% of its tangible book value.
The acquisition will give Mid Penn its first branches in central New Jersey.
“We are enthusiastic to partner with Brunswick as our first formal step into the dynamic central New Jersey community,” Rory Ritrievi, Mid Penn’s chairman, president and CEO, said in the press release announcing the deal.
One Brunswick director will join Mid Penn’s board.
The deal is expected to be 8.5% accretive to Mid Penn’s earnings per share. It should take less than three years for Mid Penn to earn back less than 4% dilution to its tangible book value.
Mid Penn plans to cut 37.5% of Brunswick’s annual noninterest expenses. It expects to incur $8.5 million in merger-related expenses.