How Bank Director’s AOBA conference spurred big bank merger
Discussions between WesBanco in Wheeling, W.Va., and Premier Financial in Defiance, Ohio seemingly began at the Acquire or Be Acquired conference hosted by Bank Director.
The $18.1 billion-asset WesBanco agreed in July to buy the $8.8 billion-asset Premier for $959 million in a deal expected to close in the first quarter.
Talks began on Jan. 27 at a banking conference in Scottsdale, Ariz., when Jeffrey Jackson, WesBanco’s president and CEO, met with Premier CEO Gary Small, according to a regulatory filing tied to the pending merger. More meetings, attended by some Wesbanco directors, took place over the next two days at the conference.
Though the filing did not identify the conference, the location and date lines up with this year’s AOBA conference.
The filing disclosed that Premier had become more open to a deal prior to the meetings in Arizona and had engaged in periodic discussions with two larger, unnamed banks. Premier was looking ahead to hitting $10 billion of assets and the “expected regulatory and operational challenges associated with growth above that size,” the filing said.
WesBanco and Premier signed a non-disclosure agreement on Feb. 8 to allow them to exchange confidential information. Premier began sharing preliminary due diligence materials with Wesbanco.
Premier’s board, during a March 8 meeting, encouraged management and the company’s investment bank to explore deals with Wesbanco and the unnamed banks that had expressed interest in the past. Premier also opened a data site to facilitate sharing information.
One of the unnamed banks took itself out of consideration after being contacted in early April by Premier’s investment bank.
WesBanco’s board determined at a March 28 meeting that a capital raise would be necessary to maintain strong regulatory capital as part of an acquisition. Wesbanco sent a nonbinding indication of interest to Premier on April 18; the other unnamed bank sent its proposal 11 days later.
WesBanco’s all-stock proposal involved an aggregate consideration of $819.3 million to $839.8 million and three director seats, the filing said. The other proposal had an aggregate value of $827.4 million and two director seats. Both proposes included a discussion about continuing roles for certain Premier executives; the unnamed bank did not outline a plan to raise supplemental capital.
Premier’s investment bank determined that WesBanco’s offer could represent a nearly 20% premium to Premier’s stock price on April 29; the other proposal was nearly 18% higher. Premier also liked Wesbanco’s plan to raised capital in conjunction with the acquisition.
Premier decided to focus on talks with WesBanco, instructing its investment bank to pursue a higher exchange ratio and more board seats. On May 6, WesBanco slight raised the high end of the exchange ratio and committed to an additional board seat.
WesBanco’s executive committee, during a May 15 meeting, authorized raising $200 million of capital. The first draft of the merger agreement was shared on June 24.
Each company’s board unanimously approved the merger at July 25 meetings. The deal, which was announced the next day, priced Premier at 142% of its tangible book value.
WesBanco is selling common stock to a group that includes Wellington Management, Glendon Capital Management and Klaros Capital.
The merger “will bring together two high-caliber institutions to create a community-focused, regional financial services partner strongly positioned to serve the unique needs of both our new and legacy communities,” Jackson said in a press release announcing the deal.
The deal is expected to be 40% accretive to WesBanco’s 2025 earnings, including cost savings and excluding merger-related charges and a transaction-related loan-loss provision. It should take nearly three years for the company to earn back an estimated 13% dilution to tangible book value.
WesBanco will cut about 26% of Premier’s annual noninterest expenses. The company expects to incur about $71.6 million of merger-related charges.