Northwest Bancshares, the holding company for Northwest Bank, has agreed to acquire Penns Woods Bancorp in an all-stock deal valued at about $270.4m.
Penns Woods is the multi-bank holding company for Jersey Shore State Bank and Luzerne Bank.
According to the terms of the definitive agreement, shareholders of Penns Woods will receive 2.385 shares of Northwest Bancshares common stock for each Penns Woods share they own.
Based on Northwest Bancshares’ closing stock price of $14.44 on 16 December 2024, this equates to $34.44 per Penns Woods share.
The aggregate transaction value includes consideration for unexercised Penns Woods stock options.
Following the completion of the transaction, Penns Woods’ shareholders will hold around 12% of the combined company’s outstanding shares. They are also expected to receive a dividend equivalent to $0.48 per share, based on Northwest Bancshares’ current quarterly dividend.
Through the merger, Northwest Bancshares aims to bolster presence in North Central and Northeastern Pennsylvania by adding 24 branch locations across Blair, Centre, Lycoming, Clinton, Luzerne, Montour, and Union counties.
The transaction will also connect Penns Woods’ footprint with Northwest Bancshares’ existing presence in both eastern and western Pennsylvania.
Upon the closing of the proposed deal, Northwest Bancshares will be expanding its network to more than 150 financial centres and loan production offices across four states.
Jersey Shore State Bank and Luzerne Bank branches will become branches of Northwest Bank, following the transaction.
Penns Woods CEO Richard Grafmyre said: “We believe that the combination of our highly compatible organisations will create a catalyst for growth and benefit all of the communities we serve.
“The merger will provide increased scale and additional capabilities for our customers, and it will provide greater opportunities for our employees to advance their careers as a part of a larger organisation.”
Headquartered in Pennsylvania, Penns Woods reported assets of about $2.3bn, total deposits of $1.7bn, and total loans of $1.9bn as of 30 September 2024.
Post-merger, the combined company is projected to have pro forma total assets exceeding $17bn.
Northwest Bancshares expects the deal to be nearly 23% accretive to its 2026 fully diluted earnings per share, excluding one-time costs.
Northwest Bancshares president and CEO Louis Torchio said: “We will be strongly positioned to continue to serve communities that are familiar to Northwest, expand our presence into new markets, and deliver exceptional banking services across our entire footprint.
“Through this acquisition, we look forward to building on Northwest’s rich history of community-focused banking and delivering even greater value to our customers, employees, communities, and shareholders.”
The transaction has been unanimously approved by the boards of both companies.
Subject to customary conditions, including regulatory and Penns Woods shareholders approvals, the merger is expected to be completed in Q3 2025.
For the transaction, Janney Montgomery Scott is serving as the financial adviser to Northwest Bancshares, with Dinsmore & Shohl acting as its legal counsel. Stephens is Penns Woods’ financial adviser, while Stevens & Lee serving as its legal counsel.
