LONDON, UK / ACCESSWIRE / May 23, 2018 / If you want access to our free research report on MB Financial, Inc. (NASDAQ: MBFI), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=MBFI as the Company's latest news hit the wire. On May 21, 2018, Fifth Third Bancorp (NASDAQ: FITB) announced that it has signed an agreement to acquire MB Financial, Inc. (MBFI), after which MB Financial will merge into Fifth Third. The cash plus stock deal is valued at approximately $4.7 billion, with 90% of the transaction being in stock and the balance 10% in cash. The merger is expected to significantly strengthen Fifth Third's presence in Chicago. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Terms of the Acquisition
As per the terms of the signed agreement, Fifth Third has agreed to pay a total of $54.20 for each MB Financial share. This includes 1.45 Fifth Third shares plus $5.54 in cash. The offer price is at a 24% premium of MB Financial's share price at the time of closing on May 18, 2018.
The final date of closing has not been disclosed, and the deal is subject to regulatory and shareholder approvals, as well as other closing conditions.
Once the deal is closed, the Fifth Third Board will expand to include two members from MB Financial. Mitchell Feiger, the current President and Chief Executive Officer (CEO) of MB Financial, will take over as the Chairman and CEO of the merged entity in Chicago. The key members of MB Financial's executive team will also join Fifth Third's team.
Commenting on the acquisition, Greg D. Carmichael, Chairman, President, and CEO of Fifth Third, said:
"We view MB Financial as a unique partner in our efforts to build scale in this strategically important market. Customers of both banks will benefit from greater convenience and the complementary capabilities that our banks, together, can offer."
Mitchell Feiger added:
"Teaming up with Fifth Third allows us to leverage our complementary capabilities for the benefit of our customers and the communities we serve. I am very excited to lead the combined organization in Chicago. Our commercial expertise and strong credit culture complement the strengths of Fifth Third in large corporate lending, capital markets, wealth management, and the payments business."
The acquisition is expected to negatively impact Fifth Third's regulatory common equity Tier 1 (CET1) ratio by approximately 45 basis points. However, the pro-forma tangible common equity to tangible assets (TCE) ratio of the combined entity is projected to be 8.2% at the time of the closing of the deal. Fifth Third intends to complete its 2017 share buyback plan and is expected to repurchase its shares valued at $235 million before the shareholders of MB Financial vote on the deal. The Company can even buy additional shares after the vote. The amount of share buybacks is subject to applicable securities laws and market conditions.
Strategic Advantages of the Acquisition
Chicago, Illinois-based MB Financial is the holding Company for MB Financial Bank, N.A. MB Financial has over $20 billion in assets; $15 billion in deposits; and has been operating in the Chicago area for over 100 years. It caters to middle-market customers and is known for its strong deposit franchise and customer-centric corporate culture. Fifth Third will corner a 6.5% of the total deposit market share in Chicago at the close of this merger. The merged Company will be ranked second in terms of estimated retail deposits and ranked fourth in terms of total deposits amongst the 200 odd banks in the Chicago area. The merged Company will have the second rank in terms of its share of middle market relationships in Chicago and a 20% share of this demographic.
Fifth Third expects the deal to be accretive to its earnings per share (EPS) within the first year of closing the deal, and accretive by 7% in the second year of closing the deal. The Company expects to realize significant cost savings from synergies from the second year of closing the deal. Fifth Third expects the acquisition to result in an internal rate of return (IRR) of approximately 18.5%. Additionally, both banks have complementary business lines in a common market area, which will accelerate the overall growth of the merged entity.
The merger could also result in job cuts as both Companies have bank branches in close proximity. On completion of the merger, Fifth Third expects to close 40 to 50 branches. The cost savings from job cuts and closing of certain branches would be around $255 million annually.
About Fifth Third Bancorp
Established in 1858, Cincinnati, Ohio-based Fifth Third is a diversified financial services organization. Its four main businesses include Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. Fifth Third is one of the largest money managers in the Midwest. It has 1,153 full-service Banking Centers and 2,459 ATMs with Fifth Third branding in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, and North Carolina. Fifth Third had over $142 billion in assets as on March 31, 2018.
Stock Performance Snapshot
May 22, 2018 - At Tuesday's closing bell, MB Financial's stock rose 3.39%, ending the trading session at $50.95.
Volume traded for the day: 3.27 million shares, which was above the 3-month average volume of 535.89 thousand shares.
Stock performance in the last month – up 19.63%; previous three-month period – up 21.60%; past twelve-month period – up 21.95%; and year-to-date - up 14.44%
After yesterday's close, MB Financial's market cap was at $4.35 billion.
Price to Earnings (P/E) ratio was at 20.76.
The stock has a dividend yield of 1.88%.
The stock is part of the Financial sector, categorized under the Regional - Midwest Banks industry. This sector was up 0.5% at the end of the session.
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