Huntington Bancshares Acquires Rival Sky Financial for $3.6 billion
Huntington Bancshares Incorporated and Sky Financial Group Inc. announced Wednesday the signing of a definitive agreement to merge the two companies in a stock (90%) and cash (10%) transaction valued at approximately $3.6 billion.
Under the terms of the agreement, Sky Financial Group shareholders will receive 1.098 shares of Huntington common stock, on a tax-free basis, and a taxable cash payment of $3.023 for each share of Sky Financial Group. Based on the $24.77 closing price of Huntington's common stock on December 19, 2006, the transaction values each share of Sky Financial Group common stock at $30.22, a 25% premium to its closing price of $24.17.
Huntington expects the transaction to be immediately accretive to 2007 earnings, excluding one-time charges, and is expected to result in approximately $115 million in annual cost savings.
On a pro forma basis, Huntington will have 756 offices, 1,384 ATMs, and deposits of approximately $38 billion as of September 30, 2006. In Ohio, Huntington will operate 449 offices, 819 ATMs, with deposits of approximately $25 billion as of September 30, 2006, on a pro forma basis.
The merger was unanimously approved by both companies' boards of directors. It is expected to close early in the 2007 third quarter, pending customary regulatory approvals, as well as the approval of Huntington's and Sky Financial Group's shareholders.
"This merger is consistent with our conviction that Huntington can create shareholder value by participating in consolidation in the Midwest and lowering costs and increasing customer convenience," said Thomas E. Hoaglin, Huntington's chairman, president, and chief executive officer. "Importantly, it provides significant benefits to Huntington's shareholders and customers. For shareholders, this transaction is immediately accretive to 2007 earnings and is expected to add 4% to earnings in 2008. Further, the value of the expense efficiencies that can be gained will exceed the premium we are paying."
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