(Reuters) – First Citizens BancShares Inc FCNCA.O said on Friday it would buy peer CIT Group Inc CIT.N in a deal valued at $2.2 billion, creating a bigger regional player in the United States at a time when banks are grappling with low interest rates.
CIT shares surged 26% to $24.86, well above the offer price of $21.90 per share, while those of First Citizens were up 10.5% at $390.24.
The deal, which is expected to close in the first half of 2021, creates a combined entity with more than $100 billion in assets and over $80 billion in deposits, making it the 19th largest U.S. bank, First Citizens said in a statement.
Near-zero interest rates have taken a big toll on the profit of regional banks, which rely more on lending for much of their business.
First Citizens said the merger would combine its low-cost retail deposit franchise with CIT’s national commercial lending operations, offering greater scale to drive growth.
First Citizens Chairman and Chief Executive Officer Frank Holding Jr. will retain the same roles at the combined company, which will operate under the First Citizens name, while CIT CEO Ellen Alemany will become its vice chairwoman.
Under the all-stock deal, CIT shareholders will receive 0.0620 shares of First Citizens stock for each share held.
Piper Sandler & Co served as financial adviser to First Citizens, while Keefe, Bruyette & Woods and Morgan Stanley & Co served advised CIT.
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