Payments acquisition expected to boost fee income at First Financial
First Financial Bancorp. has agreed to buy the capital markets firm Bannockburn Global Forex for about $110 million. Both companies are in Cincinnati.
The $14.1 billion-asset holding company for First Financial Bank said Wednesday that Bannockburn provides transactional currency payments, foreign exchange hedging and other advisory products to more than 1,500 clients.
First Financial would pay $3.7 million in cash and 4.66 million of its shares, according to an investor presentation filed with the Securities and Exchange Commission. It valued the deal at about $110 million presuming a First Financial stock price of $22.79. However, if the 20-day average stock price of First Financial were to be less than $24.25 five days before closing, then Bannockburn shareholders could opt to receive as much as $50 million in cash and 2.06 million First Financial shares, according to the presentation.
First Financial would add "$30 million of high-quality, diversified fee income" each year by buying Bannockburn, the presentation said.
"We continue to broaden our product offering to clients, especially middle-market firms that conduct business on an international scale," Archie Brown, president and CEO of First Financial Bank, said in a news release. "In addition, we are excited about the opportunity to provide banking services to Bannockburn's extensive customer base."
Bannockburn has completed more than $90 billion of transaction volume through more than 150,000 secure transactions since its formation in 2009, according to the release. The company primarily focuses on midsize commercial clients across the country through its network of 10 offices in selected cities.
R. Scott Siefers, who covers First Financial for Sandler O’Neill, said in a research note to clients that the deal should boost the bank’s fee income, which was a goal.
"Our best guess would have [been] something along the lines of a more traditional asset manager," the note said. "Nevertheless, this transaction should offer a good cultural fit in that it is headquartered just down the road from FFBC, and management of the two companies already know one another."
First Financial anticipates a "low-single-digit GAAP ... accretion" to earnings per share, the presentation said.
Upon completion of the transaction, Bannockburn will become a division of First Financial Bank with current Bannockburn leadership continuing in their positions.
Lazard and Vorys, Sater, Seymour and Pease LLP advised First Financial, while Squire Patton Boggs LLP served as legal adviser to Bannockburn.