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.
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.
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“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.