The deal will have Fifth Third Bancorp using a mix of stock and cash to buyout MB Financial Inc. The total value of the offering is sitting at $4.7 billion, with the split between stock and cash being 90% and 10%, respectively.
The offer for MB Financial Inc will have holders of MBFI stock receiving 1.45 shares of FITB stock and $5.54 in cash for each share that they own. This represents a 20% premium to the closing price of MBFI stock as of May 18, 2018.
“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,” Greg Carmichael, Chairman, President and CEO of Fifth Third Bancorp, said in a statement. “Furthermore, we not only expect the merger to accelerate our progress towards our NorthStar financial targets but also raise them above our previous guidance.”
Fifth Third Bancorp also notes that the deal will have two members of MB Financial Inc’s Board of Directors joining its own Board of Directors. The company also says that Mitchell Feiger, President and CEO of MBFI, will become its Chairman and CEO for the Chicago area. It also expects to keep on other members of MBFI’s management team.
MB Financial Inc and Fifth Third Bancorp didn’t say when they expect the merger to close. However, the companies do note that the deal still need regulatory approval before moving forward.
MBFI stock was up 13% and FITB stock was down 7% as of noon Monday.
As of this writing, William White did not hold a position in any of the aforementioned securities.