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WSFS Financial acquiring Beneficial Bancorp in $1.5B deal


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WSFS Financial acquiring Beneficial Bancorp in $1.5B deal

Wilmington, Del.-based WSFS Financial Corp. is acquiring Philadelphia-based Beneficial Bancorp Inc. in a deal valued at approximately $1.5 billion.

Beneficial Bank is also expected to merge into WSFS Bank.

For each share held, Beneficial Bancorp shareholders will receive 0.3013 of a WSFS Financial common share and $2.93 in cash. The deal value equates to $19.61 per Beneficial Bancorp common share, based on the buyer's closing price as of Aug. 7.

On a per-share basis, SNL calculates that the deal value is 143.7% of book, 172.7% of tangible book, and 53.0x earnings. It is 26.19% of assets, 36.32% of deposits and has a tangible book premium to deposits ratio of 15.88%.

The deal has a one-day premium of 19.55%, based on Beneficial Bancorp's closing price of $16.4 as of Aug. 6, and a one-month premium of 16.71%, based on Beneficial Bancorp's closing price of $16.8 as of July 9.

As of June 30, WSFS Financial had $7.11 billion in assets, while Beneficial Bancorp had $5.77 billion in assets.

The deal is expected to be accretive to WSFS Financial's earnings per share in the first full year of combined operations, excluding one-time merger and restructuring costs, and 8% accretive once all synergies are achieved in 2021. The internal rate of return is approximately 19%.

For comparison, SNL valuations for bank and thrift targets in the Mid-Atlantic region between Aug. 7, 2017, and Aug. 7, 2018, averaged 144.37% of book, 146.29% of tangible book and had a median of 35.68x last-12-months earnings, on a per-share basis.

WSFS Financial expects to achieve annual synergies of $68 million per year, once fully phased in by 2021. About $56 million of the synergies, or 37% of Beneficial's year-to-date 2018 annualized non-interest expense, are to be derived from nonbranch operations and personnel costs.

The deal is expected to close in the first quarter of 2019.

Upon completion, WSFS Financial expects to consolidate about 25% of its combined physical banking offices over the next 12 to 24 months due to geographic overlap. The company plans to reinvest an incremental $32 million, or about 50% of the estimated cost savings from the network optimization, into a five-year transformational investment in technology and delivery systems. The company expects to incur pretax merger and restructuring costs of about $146 million.

WSFS Financial will enter New Jersey with 23 branches to be ranked No. 28 with a share of 0.40% of approximately $331.27 billion in total market deposits and will expand in Pennsylvania by 39 branches to be ranked No. 18 with a share of 1.03% of approximately $389.65 billion in total market deposits.

Tangible book value dilution from the deal is expected to be 3.2% with an earnback of 2.8 years before the investment into delivery systems, calculated via the crossover method. With the investment in effect, the company expects TBV dilution of 4.3% with an earnback of 3.7 years.

Beneficial Bancorp President and CEO Gerard Cuddy will also become vice chairman of WSFS Bank and director of WSFS Financial, along with two other Beneficial Bancorp directors.

Boenning & Scattergood Inc. served as financial adviser to WSFS Financial, while Covington & Burling LLP served as legal adviser. For Beneficial Bancorp, Sandler O'Neill & Partners LP served as financial adviser, while Kilpatrick Townsend & Stockton LLP served as its legal adviser.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.

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