Fifth Third Bancorp has agreed to acquire MB Financial in a stock-and-cash transaction valued at about $4.7bn to broaden its middle market customer base in Chicago.
For each share of MB Financial, its shareholders will receive equivalent of about $54.20, comprising 1.45 shares of Fifth Third common stock and $5.54 in cash.
The consideration represents a premium of nearly 24% to the closing price of MB Financial common shares on 18 May 2018.
Chicago-based MB Financial, which is the parent company for MB Financial Bank, manages about $20bn in assets.
Upon completion of merger, the combined entity will have a total of 6.5% deposit market share in Chicago, ranking the combined company fourth in total deposits and second in estimated retail deposits among the nearly 200 banks in the market.
The merged entity will have a 20% share of middle market relationships in Chicago, ranking it second.
Fifth Third Bancorp chairman, president and CEO Greg Carmichael said: “There were no other potential partners of the same caliber as MB Financial in the Chicago market, and we are very pleased to reach an agreement to merge our companies.
“We view MB Financial as a unique partner in our efforts to build scale in this strategically important market. Customers of both banks will benefit from greater convenience and the complementary capabilities that our banks, together, can offer.”
As per the merger agreement, two members of MB Financial’s board of directors will join the Fifth Third Bancorp board.
The transaction is likely to slash Fifth Third’s regulatory common equity Tier 1 (CET1) ratio by approximately 45 basis points.