F.N.B.Corp. agreed to acquire Yadkin Financial Corp. in a $1.4 billion all-stocktransaction.
The deal is valued at approximately $27.35 per share, or$1.4 billion in the aggregate, using the 20-day trailing average closing stockprice of F.N.B. as of July 20.Yadkin's shareholders will receive 2.16 F.N.B. common shares for each Yadkincommon share. The exchange ratio is fixed, and the transaction is expected toqualify as tax-free for Yadkin shareholders, who will own about 35% of F.N.B.after the transaction.
Yadkin's nonvoting common shareholders can elect to receiveF.N.B. shares at the exchange ratio, or cash equal to the exchange ratiomultiplied by the buyer's 20-day trailing average closing price. Yadkin has200,000 nonvoting common shares, according to a July 21 news release.
SNL Financial calculates the deal value to be 146.4% ofbook, 231.8% of tangible book, 22.2x earnings, and 17.6x last-12-months coreearnings, on a per-share basis. The price is 27.65% of deposits and 19.80% ofassets.
For comparison, SNL valuations for bank and thrift targetsin the Southeast region between July 21, 2015, and July 21, 2016, averaged159.23% of book, 163.72% of tangible book and had a median of 17.93xlast-12-months earnings on a per-share basis.
A regional bankingfranchise
As of June 30, F.N.B. had total assets of approximately$21.21 billion, while Yadkin had total assets of about $7.46 billion.Following the acquisition, F.N.B. will have nearly $30 billion in assets,approximately $21 billion in deposits, $20 billion in total loans, and morethan 400 full-service branches.Statesville, N.C.-based YadkinBank will merge into Pittsburgh-based , acommercial bank subsidiary of F.N.B.
The deal will provide F.N.B. with approximately $5.3 billionin total deposits, $5.4 billion in total loans and 100 banking offices in NorthCarolina and South Carolina, according to the merger release. The transactioncreates a regional banking franchise that extends from the Mid-Atlantic to theSoutheast and provides F.N.B. with a presence in high-growth markets includingRaleigh, Charlotte and the Piedmont Triad which is comprised of Winston-Salem,Greensboro and High Point.
F.N.B. Corp. will enter North Carolina with 99 branches tobe ranked seventh with a 1.43% share of approximately $356.08 billion in totalmarket deposits. The buyer enters South Carolina with three branches to beranked No. 56 with a 0.13% share of approximately $75.11 billion in totalmarket deposits, according to SNL data.
The companies expect to complete the deal and integration inthe first quarter of 2017, subject to approval by regulators and shareholdersand other closing conditions.
RBC Capital Markets LLC served as exclusive financialadviser, and Reed Smith LLP served as legal counsel to F.N.B. Sandler O'Neill& Partners LP acted as exclusive financial adviser to Yadkin, with JonathanDoyle, Scott Clark, Thomas Sullivan and Reid Brewer as lead bankers. SkaddenArps Slate Meagher & Flom LLP served as legal counsel to the seller.
F.N.B. on July 21 reported second-quarter net incomeavailable to common stockholders of $39.3 million, or 19 cents per share,including 3 cents per share in merger-related costs. The company's 2015second-quarter net income available to common stockholders was $38.1 million,or 22 cents per share.
F.N.B.'s operating net income available to commonstockholders was $46.1 million, or 22 cents per share, for the second quarterof 2016, compared to $38.4 million, or 22 cents per share, for the same periodin 2015.
Yadkin reported second-quarter net income available tocommon shareholders of $17.4 million, or 34 cents per share, compared to $10.6million, or 33 cents per share, in the year-ago period. Net operating earningsavailable to common shareholders, which excludes certain non-operating incomeand expenses, was $21.2 million, or 41 cents per share, in the second quarterof 2016, compared to $11.9 million, or 38 cents per share, in the year-agoperiod.
SNL Financial is anoffering of S&P Global Market Intelligence.