Huntington to buy Sky Financial for $3.6 bln
U.S. regional bank Huntington Bancshares Inc. (HBAN.O: Quote, Profile , Research) said on Wednesday it would buy its Ohio neighbor Sky Financial Group Inc. (SKYF.O: Quote, Profile , Research) for about $3.6 billion in stock and cash to create a stronger presence in the U.S. Midwest.
The companies said the transaction values each share of Sky Financial Group at $30.22, a 25 percent premium to its closing price of $24.17 on December 19.
Huntington expects the transaction to immediately add to 2007 earnings, excluding one-time charges, and to result in $115 million in annual cost savings.
"This merger is consistent with our conviction that Huntington can create shareholder value by participating in consolidation in the Midwest and lowering costs and increasing customer convenience," said Thomas Hoaglin, Huntington’s chairman, president, and chief executive officer.
The combination would make Huntington the 24th-largest domestically controlled U.S. bank, Hoaglin said.
Sky Financial shareholders will receive 1.098 shares of Huntington stock, on a tax-free basis, and a taxable cash payment of $3.023 for each share of Sky Financial.
Columbus-based Huntingdon had deposits of about $38 billion as of September 30 and has over 380 offices in Indiana, Kentucky, Michigan, Ohio, and West Virginia.
Bowling Green-based Sky Financial has operations in Ohio, Pennsylvania, Indiana, Michigan and West Virginia.
Upon closing, Hoaglin will remain chairman and chief executive officer and Sky Financial CEO Marty Adams will be appointed president and chief operating officer, reporting to Hoaglin.
However, under an employment agreement, Adams will become CEO and president on, or before, December 31, 2009, with Hoaglin remaining as chairman until early 2011, when he will retire.
After the merger, Huntington’s board will have 15 members, with 10 from Huntington and five from Sky Financial.
The deal was unanimously approved by both companies’ boards and is expected to close early in the third quarter of 2007, pending approval by regulators and shareholders of both companies.
Lehman Brothers Inc. and Bear, Stearns & Co. Inc. acted as financial advisors to Huntington. Sandler O’Neill & Partners, L.P. was financial adviser to Sky Financial Group.
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