Talmer Bank to Merge with Chemical in $1.1B Deal
MIDLAND, Mich. – The boards of directors of Chemical Financial Corp., the holding company for Chemical Bank based here, and Talmer Bancorp Inc., the holding company for Talmer Bank and Trust, today announced the execution of a definitive agreement for Chemical Financial Corp. to partner with Talmer Bancorp in a cash and common stock merger transaction valued at approximately $1.1 billion.
The merger will result in the creation of one of the largest community banks in the Midwest. Based on the companies balance sheets as of Dec. 31, the combined organization will have approximately $16 billion in assets, $12 billion in loans and $13 billion in deposits with 266 locations in Michigan and northeast Ohio.
After the closing, Chemical intends to consolidate Talmer into Chemical Bank, and operate under the Chemical Bank name. Talmer Bank and Trust will operate as a separate subsidiary of Chemical between the closing date and the conversion of data processing systems. Five members of the Talmer board of directors will join Chemical’s board upon completion of the transaction, bringing the total number of Chemical board members to 12.
David B. Ramaker will continue to serve as CEO and president of Chemical Financial Corporation and chairman, CEO and president of Chemical Bank. David T. Provost, Talmer’s president and CEO and chairman of Talmer Bank, will join the Chemical board of directors. Gary Torgow, Talmer’s Chairman, will serve as chairman of the board of the combined entity.
Under the terms of the definitive agreement, Chemical will acquire all of the outstanding shares of Talmer common stock for common stock and cash in a transaction valued at approximately $1.1 billion, or $15.64 per share, based on the closing price of Chemical of $29.70 per share as of Jan. 25. Talmer shareholders will receive 0.4725 shares of Chemical common stock and $1.61 per share in cash. Subject to receipt of regulatory approvals and satisfaction of other customary closing conditions, including approval of both Chemical and Talmer shareholders, the transaction is anticipated to close in the second half of this year.
Chemical anticipates the transaction, with cost savings fully phased in, to be accretive to its earnings per share by approximately 8% in the first full year (excluding acquisition-related and integration costs associated with the transaction). Chemical expects net cost savings to reach an annual run rate of approximately $52 million. Pre-tax acquisition-related and integration costs associated with the transaction are expected to total approximately $62 million. Chemical estimates the tangible book value earn-back period to be approximately 3.25 years.
“This is clearly a transformational merger between two healthy Michigan banks with complementary geographies,” said Ramaker in a prepared statement. “We have been impressed by what Gary Torgow, Dave Provost and the Talmer team has accomplished in a relatively short period of time, growing Talmer into one of the region’s leading financial institutions. We were even more impressed by the manner in which they did so: building a strong core banking organization with talented commercial bankers and an attractive customer base. In Talmer, we are partnering with a like-minded, growth-oriented organization, which shares a conservative lending culture built by talented and experienced professionals who seek to develop and support long-term client relationships with businesses and consumers who reside in the communities they serve. In addition to the cultural fit, the two organizations will add talent, scale, and strong track records for acquisitive and organic growth that we believe will facilitate the combined organization’s continued growth.
“Through this partnership, we will make a marked entry into the southeast Michigan market, and expand for the first time beyond our state’s borders. While Talmer’s operations across Michigan clearly support our goal of being “Michigan’s Community Bank,” its operations in northern Ohio and other contiguous states should position us well for future growth in those markets in the years ahead. We expect complementary strengths in specialty business lines such as wealth management and mortgage banking will lead to organic growth opportunities across the newly expanded franchise,” added Ramaker.
In his prepared statement, Talmer’s Torgow noted both bank’s “strong track records of acquisitive and organic growth. We view this as the start of the next stage of our companies’ evolutions.”
Combining Chemical’s 185 Michigan branches with Talmer’s 51 Michigan locations will result in the state’s third largest branch delivery system, while the entities’ combined $10.8 billion in Michigan deposits would make it the sixth largest bank, by deposits, in the state and the only one of those six headquartered in Michigan. In addition to expanding Chemical’s delivery system in its upper, central and southwest Michigan regions, the merger will introduce the Chemical brand to the southeast Michigan and northern Ohio markets, where it will have 31 and 27 branches, respectively.
Chemical was advised by the investment banking firm of Sandler O’Neill + Partners and the law firm of Warner Norcross & Judd LLP. Talmer was advised by the investment banking firm of Keefe, Bruyette & Woods and the law firm of Nelson Mullins Riley & Scarborough, LLP.
SOURCE: Joint news release from Chemical Financial Corp. and Talmer Bancorp Inc.
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