Huntington Bank to Buy FirstMerit

The per-share price is below where FirstMerit's shares were trading as late as November 2015.
Katie Kuehner-HebertJanuary 26, 2016

Huntington Bancshares on Tuesday said it has agreed to buy FirstMerit for about $3.4 billion — another match-up of small to mid-size banking companies in an era of historically tight margins and higher regulatory hurdles.

The stock-and-cash deal would create a regional player with nearly $100 billion in assets, operating across an eight-state Midwestern footprint, the companies said in a joint press release. The combination would create the largest bank in Ohio, based on deposit market share. Huntington would also expand its operations into the “attractive” new markets of Chicago and Wisconsin.

“Our combined track records of service excellence and efficient financial management will add value for our collective shareholders, customers, communities, and colleagues,” Huntington’s chairman, president, and chief executive Steve Steinour said.

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The deal is the latest in a string of mergers among regional and community banks, “spurred by years of near-zero interest rates and higher costs related to stricter regulations imposed since the financial crisis,” according to Reuters.

Under the terms of the deal, FirstMerit shareholders would receive 1.72 shares of Huntington common stock, and $5 in cash, for each share of FirstMerit common stock. The per-share consideration is valued at $20.14, based on the closing price of Huntington common stock on Jan. 25.

The transaction is expected to be completed in the third quarter of 2016. In conjunction with the closing of the transaction, four independent members of the FirstMerit board of directors would join the Huntington Board, which would be expanded accordingly.

If the transaction proceeds as scheduled, the deal would add to Huntington’s earnings per share in 2017, excluding one-time merger-related expenses, and be about 10% accretive to earnings per share in 2018.

FirstMerit’s stock jumped to $18.17 on news of the deal Tuesday, up 18%, and Huntington’s shares fell 8.6% to $8.04.

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