Fifth Third Bancorp and MB Financial announced news on Monday (May 21) that the two have inked a merger agreement in which MB Financial will merge with Fifth Third Bancorp in a $4.7 billion deal.
In a press release announcing the news, the companies said about 90 percent of the purchase will be in stock, with the remaining roughly 10 percent in cash. Based on the closing price of Fifth Third on May 18, MB Financial shareholders will get $54.20 in total consideration, consisting of 1.45 shares of Fifth Third common stock and $5.54 cash for each share of MB Financial. Shareholders of MB Financial receive a 24 percent premium over the stock’s closing price on May 18. As part of the deal, two MB Financial board of directors will join the board of Fifth Third Bancorp.
Once the deal is complete, the merged company will have a Chicago deposit market share of 6.5 percent, ranking in fourth place in total deposits and second in retail deposits among the close to 200 banks in the region. The combined company will have a 20 percent share of middle-market relationships in Chicago, giving it a second place position, the companies noted in the press release. MB Financial, which is based in Chicago and is the holding company for MB Financial Bank, has around $20 billion in assets and has been serving the Chicago market for more than 100 years.
“There were no other potential partners of the same caliber as MB Financial in the Chicago market, and we are very pleased to reach an agreement to merge our companies. 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,” said Greg D. Carmichael, chairman, president and CEO of Fifth Third Bancorp. “In addition to its strategic importance, this merger is expected to drive significant financial benefits. We expect our investment to generate an IRR of approximately 18.5 percent and to be accretive to our operating EPS in the first year, with accretion of nearly 7 percent in the second year, once cost savings are fully realized. Furthermore, we not only expect the merger to accelerate our progress toward our NorthStar financial targets but also raise them above our previous guidance.”