MB Financial (MBFI) has agreed to buy Taylor Capital Group (TAYC). The deal would create one of the largest banking companies in Chicago.

The $9.4 billion-asset MB Financial would pay $680 million in cash and stock for Taylor, the companies announced Monday. Shareholders of Taylor Capital would receive $22 for each of their shares, a premium of approximately 24% to their Friday closing price of $17.81. The payout would be 81% stock and 19% cash.

Mark Hoppe, president and chief executive of the $5.9 billion-asset Taylor, would become president of MB Financial Bank, and two directors of Taylor Capital's Cole Taylor Bank unit would join the MB Financial board.

"The merger of Taylor Capital and MB Financial is a terrific strategic transaction," Mitchell Feiger, president and CEO of MB Financial, said in a news release. "Each side brings a strong middle-market commercial banking business as well as significant national niche businesses."

The combined company would be one of the ten largest banks by deposit market share in the Chicago area, the companies said. Cole Taylor Bank has 11 locations in the Chicago area, while MB Financial has 85, in addition to offices in Pennsylvania and Indiana.

JP Morgan Securities advised MB Financial on the transaction, and Sandler O'Neill advised Taylor Capital.

Separately, both companies announced their second-quarter results on Monday. MB Financial reported a profit of $25.3 million, 14% more than in the second quarter of 2012, and Taylor reported a profit of $15.6 million, a 10% increase.

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