Susquehanna Bancshares has signed an agreement to acquire all outstanding shares of Tower Bancorp common stock, in a stock and cash transaction valued at around $343 million.

The deal, expected to be completed in the first quarter of 2012, will give Tower shareholders the option of receiving either 3.4696 shares of Susquehanna common stock or $28 in cash for each share of Tower common stock, with $88 million of the aggregate consideration being paid in cash. Based on both firms’ closing prices on 17 June 2011 this represents a premium of 41 per cent over Tower's price.

Once completed, Andrew Samuel, chairman and chief executive of Tower, will become president and chief revenue officer of Susquehanna, and will also join the board of directors of the latter firm along with two other Tower directors. Other changes will see Jeffrey Renninger, Tower president and chief operating officer, and Janak Amin, Graystone Tower Bank CEO, assume senior management positions at Susquehanna Bank.

The acquisition will increase Susquehanna’s presence in central and southeastern Pennsylvania, particularly in the counties of Chester, Dauphin and Franklin.

Once both this deal and the pending purchase of Abington Bancorp are completed, the combined company will have some $17.8 billion in assets, and will offer a range of full-service banking products including wealth management. Susquehanna also expects the transaction to be immediately accretive to earnings per share.