Huntington Bancshares Agrees To Buy FirstMerit In Stock And Cash Transaction

(RTTNews) - Huntington Bancshares Inc. (HBAN) announced that it has agreed to buy FirstMerit Corp.(FMER) the parent company of FirstMerit Bank, in a stock and cash transaction. Shareholders of FirstMerit Corp. will receive 1.72 shares of Huntington common stock, and $5.00 in cash, for each share of FirstMerit Corporation common stock. The transaction is expected to be completed in the third quarter of 2016.

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.

Based on the closing price of Huntington's common shares on January 25, 2016 of $8.80, the total transaction value is about $3.4 billion, including outstanding options and other equity-linked securities.

The company said that the combination will create the largest bank in Ohio, based on deposit market share. Huntington will also expand its operations into the attractive new markets of Chicago and Wisconsin.

Under terms, 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.

Pro forma tangible capital equity to tangible assets (TCE ratio) is projected to be 7.1% at closing, and pro forma regulatory common equity Tier 1 ratio (CET1 ratio) is projected to be 8.7% at closing on a fully phased-in Basel III basis.

Huntington said that it 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.