FirstMerit to Raise $350M, Repay Citizens Republic's Tarp

FirstMerit (FMER) of Akron, Ohio, seeks to raise as much as $350 million in connection with its deal for Citizens Republic Bancorp (CRBC).

It plans to use the funds to repurchase the shares that Citizens Republic issued to the U.S. Treasury as part of the Troubled Asset Relief Program. FirstMerit agreed to buy Citizens Republic in September and said it would repay the seller's Tarp funds.

The $14.9 billion-asset FirstMerit plans to sell as many as 4.6 million depositary shares at $25 per share, each representing a fractional interest in the company’s 5.875% perpetual preferred common stock. Separately, the bank will offer $250 million in 4.35% notes due in 2023.

The underwriters, Merrill Lynch, Fenner & Smith, RBC Capital Markets, Barclays and Credit Suisse, will have the option to buy an additional $15 million of depositary shares, subject to certain conditions, FirstMerit said Tuesday.

Both offerings opened Monday and are expected to close on Feb. 4.

Citizens Republic owes the Treasury $347 million from its participation in Tarp, a FirstMerit spokesman said. The companies expect the deal to close early in the second quarter, pending shareholder approval.

FirstMerit does not have any outstanding Tarp debt, the spokesman said.

The Citizens Republic acquisition will allow FirstMerit to expand into Michigan and Wisconsin. It now operates in Ohio, Chicago and western Pennsylvania.