The First Niagara Financial Group, the New York-based financial services firm and Harleysville National, have announced that First Niagara has agreed to acquire the Philadelphia-area financial services company in an all-stock transaction valued at approximately $237 million or $5.50 per share.
Reportedly, the acquisition of the Harleysville-headquartered bank is expected to provide First Niagara with $5.6 billion in assets including, $3.6 billion in loans and $4.1 billion in deposits in 83 bank branches across nine eastern Pennsylvania counties. The parent company of Harleysville National Bank also operates East Penn Bank, Millennium Wealth Management and Cornerstone Companies.
Upon closing of the Harleysville acquisition, on a pro forma basis, First Niagara expects to maintain well-capitalized Tier 1 and total risk based capital ratios as well as a tangible common equity ratio in excess of 6%. Moreover, the merger agreement provides specific protections in the event of an increase in Harleysville’s loan delinquencies prior to closing.
Under the terms of the agreement, each Harleysville shareholder will receive 0.474 shares of First Niagara common stock for each Harleysville share owned, representing a premium of about 37.5%.
First Niagara intends to maintain all Harleysville National and East Penn branches, as well as the Pennsylvania company’s commercial banking and wealth-management business. Harleysville’s workforce currently totals over 1,100 employees, whereas First Niagara currently employs more than 2,000 and will have approximately 2,800 employees when its National City acquisition closes in September.
John Koelmel, president and CEO of First Niagara, said: This move is a next step in our strategy to leverage our strong capital position in markets with attractive demographics and long-term growth potential, where we can profitably play offense. The communities served by Harleysville are perfect complements to First Niagara’s stable and resilient markets in Upstate New York and Western Pennsylvania. We’re also excited to offer Harleysville employees opportunities to further build their careers with our growing company, while giving them the resources they need to continue providing customers the high level of personalized service they’ve come to expect.”
Paul Geraghty, president and CEO of Harleysville, who will continue to lead his in-market team, said: In First Niagara, we have a strong and profitable partner that will allow us to maintain our focus on community banking customers, while offering employees and investors attractive growth prospects.
The transaction is expected to close in the first quarter of 2010 and be accretive to First Niagara diluted earnings per share by approximately 14% in 2011. However, the transaction is subject to regulatory approval and other customary closing conditions, as well as the approval of Harleysville shareholders.
