First Citizens BancShares and CIT Merge to Create $ 100 Billion Asset Bank
$ 49 billion in assets First Citizens BancShares (NASDAQ: FCNCA) merges with assets of $ 61 billion CIT Group (NYSE: CIT) in an all-equity deal that will create America’s 19th largest bank, it was announced today.
The combined company will be headquartered in Raleigh, North Carolina, and have a significant presence in New York; New Jersey; Pasadena, California; Omaha, Nebraska; Phoenix; Jacksonville, Florida; and Columbia, South Carolina, among others.
As part of the agreement, CIT shareholders will get 0.0620 First Citizens Class A common shares for each of their CIT common shares. Upon completion of the transaction, the First Citizens shareholder will own approximately 61% of the combined entity, while CIT shareholders will own approximately 39%.
The new entity will operate under the First Citizens brand and trade under the FCNCA ticker on the Nasdaq.
First Citizens CEO Frank Holding Jr. will lead the merged company, while CIT CEO Ellen R. Alemany will become vice president and serve on the board of directors.
“This is a transformational partnership for First Citizens and CIT designed to create long-term value for all of our constituents, including our shareholders, customers, associates and communities,” Holding said in a statement. .
While CIT is the largest bank and more of a merger of equals, First Citizens is more like the buyer here as it trades at around 104% of tangible book value, while CIT trades at around 40% of tangible book value, making First Citizens’ currency more valuable.
At the deal exchange rate, CIT shareholders are exchanging their shares for an implied value of $ 21.91 per share, a premium of about 11% over the closing share price on Thursday.
The deal is expected to increase the combined company’s earnings per share by 50% once cost savings of 10% are realized, and upon closing of the deal, the increase in tangible book value is expected to be greater than 30 %.
CIT shares have jumped more than 20% this morning, while those of First Citizens have risen more than 8% from the start.
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