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Defiance to acquire United Community for USD 473mn
Posted on Monday, 09 September 2019 14:05
First Defiance Financial is carrying out its biggest-ever acquisition with the all-scrip takeover of United Community Financial for USD 473.00 million to create an Ohioan bank holding company with assets of USD 6.10 billion.
The deal, which implies a value of USD 9.78 apiece, is also the 11th-largest purchase of a US-based bank announced in 2019 to date, according to Zephyr, the M&A database published by Bureau van Dijk.
It is billed as a “transformative partnership” that creates Ohio’s leading community bank with a best-in-class performance, with a return on assets of roughly more than 1.5 per cent and return on average tangible common equity of 1.0 per cent.
The combined group will have pro forma gross loans of USD 5.00 billion, deposits of USD 4.90 billion and a market capitalisation of USD 1.00 billion.
It expects to leverage the respective strengths of both Defiance and United Community in commercial banking, residential lending, retail, insurance and wealth management.
With an increased scale - of 77 branches in total - and product offering, the institution will be better positioned to serve the states of Ohio, Michigan, Indiana, Pennsylvania and West Virginia.
Operating under a name to be determined prior to closing in early in the first quarter of 2020, the holding company will be headquartered in Defiance, Ohio, while the bank is expected to be based in Youngstown, Ohio.
Upon completion, Defiance investors will own some 52.5 per cent of the combined entity and United Community backers will hold the 47.5 per cent balance.
The deal should deliver run-rate earnings per share accretion of 14.0 per cent, with cost savings on a fully-phased in basis.
Applying pro forma merger adjustments and assuming an expected early 2020 closing, dilution to tangible book value per scrip is estimated to be 4.0 per cent, inclusive of restructuring charges with an earnback period of 1.8 years using the crossover method.
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