Fifth Third tumbles after $4.7B deal to buy Chicago-based bank

By FinancialsFOXBusiness

Rising interest rates a win for bank stocks?

NovaPoint Capital's Joseph Sroka and Flynn Zito Capital Management co-founder Doug Flynn on the outlook for stocks.

Shares of Fifth Third Bancorp, the Cincinnati-based regional bank, tumbled on Monday after agreeing to buy MB Financial in a deal valued at $4.7 billion before the buyer’s stock fell.

Continue Reading Below

Fifth Third is paying a 27% premium compared with Chicago-based MB Financial’s stock price a month ago, The Wall Street Journal reported. The comparable average premium paid in other bank deals since 2015 is 11.5%, according to data provider Dealogic, whose estimates were cited by the newspaper.

The buyer said in a press release that the merger will result in a total Chicago deposit market share of 6.5%, ranking the combined company fourth in total deposits and second in estimated retail deposits among the nearly 200 banks in the Chicago marketplace.


“There were no other potential partners of the same caliber as MB Financial in the Chicago market,” Greg Carmichael, CEO of Fifth Third, said in a press release.

The deal requires the approval of regulators and MB Financial shareholders.

What do you think?

Click the button below to comment on this article.