The William Penn board of directors met on August 21, 2024, with representatives of Piper Sandler and Kilpatrick in attendance, to review the results of the solicitation process and the terms of the non-binding indication of interest letters received from Mid Penn, Company B, Company D and Company E. Mid Penn’s non-binding indication of interest letter proposed all-stock consideration based on a fixed exchange ratio of 0.426 shares of Mid Penn common stock for each share of William Penn common stock, resulting in an implied transaction value of $11.87 per share, and requested a period of exclusivity to negotiate with William Penn. Company B’s non-binding indication of interest letter proposed all-stock consideration with an implied transaction value of $12.80 per share. Company D’s non-binding indication of interest letter proposed all-stock consideration with an implied transaction value of $11.24 per share. Company E’s non-binding indication of interest letter proposed all-stock consideration with an implied transaction value of $10.43 per share. As part of this discussion, representatives of Piper Sandler updated the William Penn board of directors regarding the then current bank and thrift mergers and acquisitions market. The William Penn board of directors also reviewed again its decision to seek a strategic partner and noted the significant challenges of the current operating environment for financial institutions and the potential impact of such conditions on William Penn. After lengthy discussion, the William Penn board of directors authorized representatives of Piper Sandler to contact Mid Penn and Company D to continue discussions with Mid Penn and Company D regarding a potential business combination with William Penn. The William Penn board of directors elected not to engage in further discussions with Company B for a number of reasons, including the fact that Company B’s stock was trading at a significant premium to its peers, in contrast to the other bidders which were all trading at a discount to their peers, which created considerably more upside with respect to a transaction involving the other bidders. The William Penn board of directors also considered, among other things, the illiquid nature of Company B’s common stock, the fact that Company B’s management team was relatively new and had limited acquisition experience, and the fact that Company B was located outside of William Penn’s market area and did not have significant knowledge of, or experience within, William Penn’s market area. The William Penn board of directors elected not to engage in further discussions with Company E due to the inadequate proposed merger consideration set forth in Company E’s non-binding indication of interest letter. On August 27, 2024, Company D notified William Penn that it would be discontinuing merger discussions with William Penn for reasons unrelated to William Penn or the specific terms of its previously submitted non-binding indication of interest letter. At a special meeting of the board of directors held on September 9, 2024, at which representatives of Piper Sandler were present, and following a discussion with management and Piper Sandler, the William Penn board of directors authorized William Penn to enter into an exclusivity agreement with Mid Penn with respect to the negotiation of a business combination transaction involving the parties. On September 11, 2024, William Penn and Mid Penn entered into an exclusivity agreement providing for a period of exclusive negotiations up to November 4, 2024. At its regularly scheduled meeting on September 25, 2024, the Mid Penn board of directors was informed by senior management that William Penn had accepted Mid Penn’s request to enter into an exclusivity agreement in order to enable the parties to further explore a potential combination of the two organizations, and that the parties had commenced their respective formal due diligence reviews. Representatives of Stephens Inc., financial advisor to Mid Penn, participated in the meeting and presented the Mid Penn board with an executive summary of the proposed transaction and a review of various preliminary pro forma financial metrics and key assumptions considered in developing those metrics. Discussion was held concerning pricing and social considerations of a proposed combination with William Penn. Following such discussion, the Mid Penn board authorized management to proceed with completing its due diligence review of William Penn and negotiating a definitive merger agreement for its review on the terms described by Stephens and members of senior management at the meeting. Members of senior management of Mid Penn and representatives of Stephens then discussed with the board of directors the current capital markets environment, including a potential opportunity for Mid Penn to enhance its capital position in the near term both independent of, and in conjunction with, a combination with William Penn, as well as the financial impact to Mid Penn in both scenarios. 51
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