Huntington Bancshares Plunges Following $3.4 Billion Acquisition Of FirstMerit

Huntington Bancshares Incorporation HBAN, a regional bank holding company with assets of $71 billion, announced on Tuesday it has entered into an agreement to acquire Firstmerit Corp FMER for approximately $3.4 billion.

FirstMerit is a diversified financial services company with assets of around $25.5 billion.

Shares of Huntington Bancshares plunged more than 10 percent on Tuesday morning following the merger announcements as shares hit a new 52-week low of $7.83. At the same time, shares of Firstmerit were higher by more than 16 percent at $17.90.

As part of the merger agreement, FirstMerit shareholders will receive 1.72 shares of Huntington common stock in addition to $5.00 in cash for each FirstMerit share they own. The per share consideration is valued at $20.14 based on Huntington's common stock closing price on Monday.

Huntington Bancshares noted that it expects the acquisition to be accretive to its earnings per share in 2017, excluding one-time merger-related expenses. The company also expects the acquisition to be approximately 10 percent accretive to its earnings per share in 2018 which is the first full year after all expected synergies are to be implemented.

The combined entity will hold nearly $100 billion in assets and will operate across 8 states in the Midwestern U.S.

"We are very pleased to come together with FirstMerit to create a regional bank with added customer convenience, an enhanced portfolio of products for consumers and businesses, as well as strong market share. I believe the strength of this deal is that both organizations already understand the needs and goals of our Midwestern customers and communities. Our combined track records of service excellence and efficient financial management will add value for our collective shareholders, customers, communities, and colleagues," said Steve Steinour, Huntington chairman, president, and CEO.

"Joining forces with Huntington will give us an opportunity to combine both companies' commercial, small business, wealth, and consumer expertise while giving all of our customers greater access to services. We will also leverage our strong credit culture and continue our mutual tradition of community involvement to help our Midwest markets grow. We have every confidence that the integration with Huntington will be smooth and seamless for our customers and our communities, and are pleased with the commitments that Huntington has made to our employees and communities," said Paul Greig, FirstMerit chairman, president, and CEO.