While the deal between Malvern, Pa.-based First Priority Financial Corp. and Millersburg, Pa.-based Mid Penn Bancorp Inc. was fairly straightforward, talks between the two parties go back to 2016. These talks were halted when Mid Penn pursued the acquisition of another Pennsylvania-based bank.
The chief executives of First Priority and Mid Penn, David Sparks and Rory Ritrievi, first had a meeting in June 2016. The two continued to meet through 2017 to discuss the two companies' directions and cultures. Discussions were put on hold when Mid Penn started negotiations with Scottdale Bank & Trust Co. Mid Penn eventually announced a deal with Scottdale in March 2017, with deal completion following 10 months later in January.
In April 2017, Sparks began talks with the CEO of another financial institution regarding a potential deal. A draft preliminary term sheet was produced, but the First Priority board deemed its terms to be insufficient, objecting to the other party's exclusivity provisions. Instead, the board directed Sparks to continue talks with other parties, including Mid Penn.
First Priority and Mid Penn revisited their initial talks in August 2017 and continued meeting until Dec. 1, 2017, when the parties agreed to a nonbinding term sheet. The term sheet required each party to deal exclusively with the other to complete due diligence and negotiate a definitive agreement through Jan. 31.
A draft merger agreement was drawn up Dec. 21, 2017. Negotiations ensued in the following weeks and on Jan. 16, the two parties signed the merger agreement. The deal, which included a $3.5 million termination fee payable by First Priority under certain circumstances, was announced after markets closed on the same day.
