Paul Murphy, left, chief executive of Cadence, and Dan Rollins, CEO of BancorpSouth. Rollins will be CEO and chairman of the combined company, while Murphy will serve as executive vice chairman.
Courtesy BancorpSouth Bank
Consolidation in the banking industry took another step forward on Monday as BancorpSouth Bank and Cadence Bancorp announced plans to merge.
The combined banks will have a market value of $6 billion and a footprint covering Texas and the Southeast.
Barron’s has written about the likelihood of increasing bank mergers several times over the last year. Bancorp South was noted by Barron’s as a likely acquirer given its acquisitive history. Late last year, analysts even hinted that a tie-up of Bancorp South and Cadence was possible given their respective Southeast footprints.
Under the terms of the all-stock merger, Cadence (ticker: CADE) shareholders will receive 0.7 shares of Bancorp (BXS) stock for each share of Cadence they own — roughly a 11% premium to Cadence’s closing stock price on Friday. In addition, Cadence shareholders will receive a $1.25 per share special dividend at the closing of the deal, which is expected in the fourth quarter, subject to shareholder and regulatory approvals.
Shares of BancorpSouth slid 3.2% in morning trading Monday, while shares of Cadence popped 5.4%.
“Cadence has built an impressive commercial banking franchise that when combined with the strengths of our team at BancorpSouth seems to be a perfect fit,” Bancorp South CEO Dan Rollins said in a statement. “This strategic merger will allow us to expand our reach and offerings with minimal overlap in our existing branch network.” Rollins will be chairman and chief executive of the combined banks.
In addition to marrying BancorpSouth’s community banking focus with Cadence’s commercial banking expertise, the two banks see other benefits of the tie-up. Earnings per share could grow by 17% in 2022 assuming cost-savings of the merger are realized by then. The combined banks are also expected to have the third best return on tangible common equity among its peer group.
Bank mergers are slowly picking up after the coronavirus pandemic halted deal activity. There were 30 mergers in the first quarter, according to investment advisory firm Raymond James, up from 29 in the fourth, but below the 46 in 2020’s first quarter.
Write to [email protected]
