Bryn Mawr, Pa.-based Bryn Mawr Bank Corp. and another company initially had a shared interest in a possible transaction to acquire Bala Cynwyd, Pa.-based Royal Bancshares of Pennsylvania Inc., according to a background of the Bryn Mawr-Royal deal included in a Form S-4 filed March 29.
The two reached out to Royal within a month of each other, with Bryn Mawr contacting Royal about the possibility of a transaction in July 2016, while the other company got in touch in June of the same year. Royal, through financial adviser Sandler O'Neill & Partners, reconfirmed the interest in a possible deal in September 2016 and sought formal written preliminary indications of interest from both institutions. Both submitted on or about Nov. 15, 2016, after executing standard nondisclosure agreements (also in September 2016) and conducting due diligence efforts. Both proposals contemplated a 100% stock transaction. While Royal did consider the possibility of deals with other institutions, no other company indicated interest in a transaction.
Both Bryn Mawr and the other company were granted access to additional due diligence materials in December 2016, after the board green-lighted continued discussions with the two interested parties. However, come January, only Bryn Mawr submitted a revised indication of interest. The proposal was for a fixed exchange ratio of 0.1025x for Royal's class A shares and a fixed exchange ratio of 0.1179x for class B shares, an improvement over the prior preliminary indication of interest. The fixed exchange ratio equated to a then-current implied price of $4.27 per share. Other items on the proposal, such as the all-stock nature of the deal, and the agreement that one of Royal's directors would be appointed to the board of Bryn Mawr, were largely the same as that of the previous proposal.
Royal and Bryn Mawr continued deal discussions. Among the items that came up was the idea of Royal President and CEO Kevin Tylus joining the combined company to assist with the transition and provide Bryn Mawr with his expertise in certain new markets. Tylus accepted the offer Jan. 30.
The merger agreement was approved by both parties after further meetings, and it was announced Jan. 31 before market opening.