Prudential Bancorp and Polonia Bancorp have entered into a definitive agreement for Polonia will be merged into Prudential, with Prudential being the surviving entity.
Article continues below
Upon the closing of the transaction, Polonia Bank, the wholly owned bank subsidiary of Polonia, will merge into Prudential’s wholly owned bank subsidiary, Prudential Savings Bank. The merger will enhance Prudential’s presence in Philadelphia County.
At closing, the combined company is expected to have over $850 million in total assets. This transaction will expand Prudential’s existing branch network in the Philadelphia market for a total of 11 branches.
Prudential will acquire 100% of the outstanding shares of Polonia in exchange for a mixture of cash and common shares of Prudential. Under the terms of the agreement, shareholders of Polonia will be entitled to elect to receive either 0.7591 shares of Prudential common stock or $11.28 in cash for each common share of Polonia, subject to proration and allocation to ensure that 50% of outstanding Polonia shares are exchanged for shares of Prudential common stock and 50% are exchanged for cash.
The exchange ratio and per share cash consideration are subject to adjustment based on the amount of Polonia’s stockholders’ equity prior to closing as calculated in accordance with the Agreement.
The transaction, which has been unanimously approved by both Prudential’s and Polonia’s boards of directors, is expected to close in the fourth quarter of 2016, pending receipt of regulatory approvals, the approval of the shareholders of Polonia and other customary closing conditions.
The cash and stock transaction is valued at approximately $38.1 million, including the value of outstanding options to acquire Polonia common stock, based on Prudential’s 20-day average closing stock price as of June 1, 2016.
Options to acquire Polonia common stock will be cashed out for the positive difference, if any, between the per share cash consideration and the option exercise price.
From the outset, the merger is expected to be significantly accretive to the combined company’s earnings per share in 2017 and thereafter. ■