Huntington Bancshares in Columbus, Ohio, has agreed to buy FirstMerit in Akron, Ohio.
The $71 billion-asset Huntington said in a press release Tuesday that it will pay about $3.4 billion, or $20.14 a share, in cash and stock for the $25.5 billion-asset FirstMerit. The deal, which is expected to close in the third quarter, values FirstMerit at 160% of its tangible book value.
The merger will create the biggest bank in Ohio by deposit market share and will allow Huntington to expand its operations into Chicago and Wisconsin.
"We are very pleased to come together with FirstMerit to create a regional bank with added customer convenience, an enhanced portfolio of products for consumers and businesses, as well as strong market share," Stephen Steinour, Huntington's chairman, president and chief executive, said in the release.
"I believe the strength of this deal is that both organizations already understand the needs and goals of our Midwestern customers and communities," Steinour said. "Our combined track records of service excellence and efficient financial management will add value for our collective shareholders, customers, communities, and colleagues."
Huntington said it expects the acquisition to be accretive to its 2017 earnings per share, excluding one-time merger-related expenses, and about 10% accretive to earnings per share in 2018. It should take Huntington about five and a half years to earn back the tangible book value dilution associated with the acquisition.
Huntington will not resubmit its 2015 Comprehensive Capital Analysis and Review plan; the company said it plans to forgo the remaining $166 million of share repurchase capacity under its 2015 plan. Huntington said it will include FirstMerit in its 2016 CCAR plan proposal, which it expects will include share repurchases.
Goldman Sachs and Wachtell, Lipton, Rosen, & Katz advised Huntington. Sandler O'Neill and Sullivan & Cromwell advised FirstMerit. Jones Day served as legal adviser to FirstMerit's board.