Susquehanna Bancshares and Tower Bancorp announced the signing of a definitive agreement under which Susquehanna will acquire all outstanding shares of Tower common stock in a stock and cash transaction.

The transaction, with an approximate total value of $343 million, is expected to be completed in the first quarter of 2012. Under the terms of the agreement, Tower shareholders will have the option of receiving either 3.4696 shares of Susquehanna common stock or $28.00 in cash for each share of Tower common stock, with $88 million of the aggregate consideration being paid in cash. Based on closing prices of Susquehanna’s and Tower’s common stock on June 17, 2011, this represents a premium of 41.0% over Tower’s closing price on such date. Upon completion of the transaction, Andrew Samuel, chairman and chief executive officer of Tower, will become president and chief revenue officer of Susquehanna. Additionally, Samuel and two other current Tower directors will be appointed to the Susquehanna Board. Jeffrey Renninger, Tower president and chief operating officer, and Janak Amin, Graystone Tower Bank CEO, will each assume senior management positions at Susquehanna Bank.

Unanimously approved by the boards of directors of both companies, the transaction will enhance Susquehanna’s already strong presence in central and southeastern Pennsylvania and will significantly increase its market share in the Pennsylvania counties of Chester, Dauphin and Franklin. Additionally, the merger will give Susquehanna branch presence in the Pennsylvania counties of Lebanon, Fulton and Centre (State College, PA).

Including Susquehanna’s pending acquisition of Abington Bancorp, the combined company will have approximately $17.8 billion in assets and will be the largest bank in deposit market share and branch count among independent banks that have more than 90% of their deposits in Pennsylvania, Maryland and New Jersey. Susquehanna will be the largest community bank in Pennsylvania after the mergers of Tower and Abington are closed. The combined company will also secure Susquehanna a top three market-share position in 14 of the counties it serves.

William J. Reuter, Susquehanna’s chairman and chief executive oOfficer, said, “This combination has tremendous benefits for shareholders, customers and communities. By increasing our market share in several of the counties we currently serve and by entering new markets, we will give customers of both institutions the added convenience of an expanded network of branches and ATMs. We’ll also be able to offer customers access to a broad array of full-service banking products, considerable small business lending opportunities, enhanced technology, and comprehensive wealth management services.”

Samuel added, “We are tremendously pleased to be joining the Susquehanna family, a Pennsylvania-based company. This merger plays to the strengths of both institutions; the combined organization will be rooted in the ideals of community banking, committed to exceptional customer service and devoted to a strong corporate culture with a clear vision. It will provide strength, size and stability for employees, customers, shareholders and our communities.”

Susquehanna was advised in this transaction by J.P. Morgan Securities, as financial advisor and Morgan, Lewis & Bockius as legal counsel. Tower was advised by Keefe, Bruyette & Woods as financial advisor and Rhoads & Sinon as legal counsel.

Previously on monitordaily: Susquehanna, Abington Bancorp Shareholders Approve Merger, published May 11, 2011