WesBanco and Premier Financial shock market with $959m merger deal

WesBanco, Inc. and Premier Financial Corp. have unveiled a high-stakes merger deal, set to significantly alter the regional banking landscape. The agreement, revealed by WesBanco President and Chief Executive Officer Jeff Jackson and Premier President and Chief Executive Officer Gary Small, outlines the merger of Premier into WesBanco. This all-stock transaction is valued at approximately $959 million, translating to $26.66 per share for Premier shareholders, based on WesBanco’s stock price as of July 24, 2024.

Details of the merger and financial implications

Under the terms of the merger, WesBanco will issue shares of its common stock in exchange for all outstanding shares of Premier common stock. Shareholders of Premier will receive 0.80 of a share of WesBanco common stock for each share they hold. This move values Premier at 142% of its tangible book value per share as of June 30, 2024, and at a multiple of 12.9 times the mean analyst estimated 2024 earnings per share. The transaction is anticipated to qualify as a tax-free reorganization.

To facilitate this significant merger, WesBanco has secured a $200 million capital raise, led by Wellington Management’s $125 million investment. Additional contributions from Glendon Capital Management LP and Klaros Capital will support the expanded balance sheet and regulatory capital ratios of the pro forma entity. This capital raise is expected to close on August 1, 2024.

Impact on shareholders and company structure

Upon completion, Premier shareholders are expected to hold 30% of the outstanding shares of the combined entity. The capital raise will account for 8% of the combined company’s shares, with legacy WesBanco shareholders holding the remaining 62%. The merger, slated for completion in the first quarter of 2025, will also see four members of Premier’s board joining WesBanco’s board.

Jeff Jackson expressed enthusiasm about the merger, highlighting its role in advancing WesBanco’s growth strategy and expanding its community-focused services. He noted that the merger aligns with WesBanco’s long-term vision, promising enhanced customer experiences and broader service offerings. Gary Small echoed this sentiment, describing the merger as a strategic fit that would benefit all stakeholders, including customers, employees, and shareholders.

Synergies and regional expansion

The merger is expected to create a financial powerhouse with approximately $27 billion in assets. The combined institution will benefit from economies of scale and enhanced pro forma profitability. With a complementary geographic footprint, the merger will position the new entity as the 8th largest bank in Ohio by deposit market share and extend its reach into Indiana, serving customers across nine states.

Excluding merger-related charges and transaction provisions for credit losses, the merger is projected to be over 40% accretive to 2025 earnings. Despite an estimated 13% dilution in tangible book value at closing, this is expected to be recovered in about 2.8 years. The merger remains subject to customary regulatory approvals and shareholder consent from both companies.

Operational changes and leadership

The combined entity will operate over 250 financial centers and additional loan production offices across nine states, expanding WesBanco’s presence by 73 financial centers primarily in northern Ohio, southern Michigan, and northeastern Indiana. Both companies aim to manage the transition with minimal disruption to employees and customers.

As part of the agreement, all Premier’s directors and executive officers have committed to vote in favor of the merger. Financial advisory roles were filled by Raymond James & Associates, Inc. for WesBanco and Piper Sandler & Co. for Premier, with additional legal support from Phillips, Gardill, Kaiser & Altmeyer, PLLC, K&L Gates LLP, Nelson Mullins Riley & Scarborough, LLP, Hunton Andrews Kurth LLP, and Schulte Roth & Zabel LLP.

WesBanco and Premier Financial Corp. overview

WesBanco, headquartered in Wheeling, West Virginia, has a longstanding reputation as a community-focused regional financial services provider. With over $18 billion in total assets, WesBanco offers a wide range of banking and financial services. Premier Financial Corp., based in Defiance, Ohio, operates 73 branches and nine loan offices across Ohio, Michigan, Indiana, and Pennsylvania.