Hancock Holding Co. in Gulfport, Miss., announced a deal Wednesday to acquire Whitney Holding Corp. in New Orleans for $1.5 billion in a stock transaction.
The $8.3 billion-asset Hancock is buying the larger $11.5 billion-asset Whitney, which has faced growing losses and deteriorating credit quality for several quarters. The deal would expand Hancock's operations in the Southeast and create a combined institution with approximately $20 billion of assets.
"We believe this agreement presents an unprecedented opportunity to enhance shareholder value and strengthen the financial options available to individuals and businesses from Texas to central Florida," Hancock Chief Executive Carl J. Chaney said in a press release.
Under the terms of the agreement, Whitney shareholders would receive 0.418 shares of Hancock common stock for each share of Whitney stock. The value of the Whitney shares would be $15.48 each, based on Hancock's Dec. 20 closing price, a 42% premium to Whitney's closing price on the same date.
At the closing, and subject to regulatory approval, Hancock has also agreed to repay Whitney's $300 million investment from the Treasury Department under the Troubled Asset Relief Program.
The combined company would have $16 billion of deposits, $12 billion of loans, 305 branches, 390 ATMs and almost 5,000 employees across Texas, Louisiana, Mississippi, Alabama and Florida.
Hancock said it expects to raise $200 million following the merger to achieve a 8% tangible common equity ratio. It also anticipates that the transaction will be 10% accretive to earnings in 2012 and 19% accretive once the companies are fully integrate in 2013.
The companies expect to complete the merger in the second quarter of 2011.