Huntington Buys FirstMerit Bank in $3.4B Deal

“We are very pleased to come together with FirstMerit to create a regional bank with added customer convenience, an enhanced portfolio of products for consumers and businesses, as well as strong market share. I believe the strength of this deal is that both organizations already understand the needs and goals of our midwestern customers and communities. Our combined track records of service excellence and efficient financial management will add value for our collective shareholders, customers, communities, and colleagues,” said Steve Steinour, Huntington chairman, president and CEO in a prepared statement.

Said Paul Greig, chairman, president and CEO of FirstMerit, in his prepared statement: “Joining forces with Huntington will give us an opportunity to combine both companies’ commercial, small business, wealth, and consumer expertise while giving all of our customers greater access to services. We will also leverage our strong credit culture and continue our mutual tradition of community involvement to help our Midwest markets grow. We have every confidence that the integration with Huntington will be smooth and seamless for our customers and our communities, and are pleased with the commitments that Huntington has made to our employees and communities.

Under the terms of the definitive agreement, FirstMerit will merge with a subsidiary of Huntington Bancshares, and FirstMerit Bank will merge with and into The Huntington National Bank. In conjunction with the closing of the transaction, four independent members of the FirstMerit board of directors will join the Huntington Board, which will be expanded accordingly.

Shareholders of FirstMerit Corp. will receive 1.72 shares of Huntington common stock, and $5 in cash, for each share of FirstMerit Corp. common stock. The per share consideration is valued at $20.14 per share based on the closing price of Huntington common stock on Jan. 25.

The transaction is expected to be completed in the third quarter, subject to the satisfaction of customary closing conditions, including regulatory approvals and the approval of the shareholders of Huntington and FirstMerit.

Huntington expects the acquisition to be accretive to earnings per share in 2017, excluding one-time merger-related expenses, and approximately 10% accretive to earnings per share in 2018, the first full year after all expected synergies are implemented.

Pro forma tangible capital equity to tangible assets is projected to be 7.1% at closing, and pro forma regulatory common equity Tier 1 ratio (is projected to be 8.7% at closing on a fully phased-in Basel III basis. Huntington will not re-submit its 2015 CCAR capital plan, and intends to forgo the remaining $166 million of share repurchase capacity under its 2015 CCAR capital plan. Huntington will include FirstMerit Corporation in its 2016 CCAR capital plan proposal and expects the plan will include share repurchases.

Goldman, Sachs & Co. served as financial adviser, and Wachtell, Lipton, Rosen, & Katz served as legal adviser to Huntington. Sandler O’Neill + Partners, L.P. served as financial adviser, and Sullivan & Cromwell LLP served as legal adviser to FirstMerit and Jones Day served as legal adviser to FirstMerit’s board of directors.

SOURCE: Joint news release from Huntington and FirstMerit.