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Chemical Financial to acquire Talmer Bancorp in $1.1 billion deal; Huntington Bank to buy FirstMerit for $3.4 billion

BY Tuesday, January 26, 2016 08:59am

MIDLAND — Chemical Financial Corp. plans to acquire Talmer Bancorp Inc. in a $1.1 billion deal that will create one of the largest banks in the Midwest.

In one of two significant mergers announced this morning affecting the Michigan market, the cash-and-stock deal will give the Midland-based Chemical Financial (Nasdaq: CHFC) more than $16 billion in assets and 266 offices, mostly in Michigan and northeast Ohio. The merger will move Chemical Financial into the Southeast Michigan market for the first time and extend the bank’s reach outside of Michigan.

“This is clearly a transformational merger between two healthy Michigan banks with complementary geographies,” Chemical Financial Chairman, CEO David Ramaker said this morning in a statement announcing the deal. “In Talmer, we are partnering with a like-minded, growth-oriented organization, which shares a conservative lending culture built by talented and experienced professionals who seek to develop and support long-term client relationships with businesses and consumers who reside in the communities they serve.

“In addition to the cultural fit, the two organizations will add talent, scale, and strong track records for acquisitive and organic growth that we believe will facilitate the combined organization’s continued growth.”

Ramaker will serve as president and CEO of the merged bank. Talmer Bancorp Chairman Gary Torgow will become chairman, and President and CEO David Provost will join Chemical’s board of directors.

Under terms of the transaction, shareholders of the Troy-based Talmer (Nasdaq: TLMR) will receive $15.64 per share and 0.4725 shares of Chemical Financial stock for each of their shares. Pending regulatory and shareholder approvals, the two banks expect the deal to close in the second half of 2016.

[RELATED: Health care, financial sectors remain hot markets for M&A]

For the deal, Chemical was advised by the investment banking firm of Sandler O’Neill + Partners and the law firm of Warner Norcross & Judd LLP. Talmer was advised by the investment banking firm of Keefe, Bruyette & Woods and the law firm of Nelson Mullins Riley & Scarborough LLP.

Chemical Financial presently has 185 offices in the Lower Peninsula with assets of $9.18 billion.

Talmer Bancorp, the holding company for Talmer Bank and Trust, has 51 branches and lending offices in Michigan, plus locations in Ohio, Illinois, Indiana and Nevada with about $6.6 billion in assets.

In West Michigan, Talmer has offices in Grand Rapids, Portage, Holland, Muskegon and Grand Haven from when it bought the assets of the former Michigan Commerce Bank in early 2014 from the bankrupt Capital Bancorp.

In the other bank merger today, Huntington Bancshares Inc. (Nasdaq: HBAN) plans to buy FirstMerit Corp. for $3.4 billion. The merged bank will have more than $100 billion in assets and locations across eight states in the Midwest.

“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,” Huntington Chairman, President and CEO Steve Steinour said in a statement.

The Columbus, Ohio-based Huntington is already one of the largest banks operating in Michigan and is among the market leaders in West Michigan. It ranked sixth among 142 banks in Michigan in the FDIC’s 2015 Summary of Deposits with 246 offices statewide and $15.16 billion in deposits.

The Akron, Ohio-based FirstMerit (Nasdaq: FMER) ranked ninth in Michigan in the 2015 Summary of Deposits with 138 offices in Michigan and $5.10 billion in assets. In West Michigan, FirstMerit has single locations in Grand Haven, Holland, Muskegon and Portage, plus several offices in and around Lansing.

Both deals could represent a renewal of M&A activity after a brief period of calm.

Rajesh Kothari, managing director of Cascade Partners LLC in Southfield, expects to see more mergers, both by regional and super-regional banks seeking to make acquisitions to drive growth, as well as smaller community banks looking for a partner in the face of rising regulatory compliance costs.

“I don’t think the tide is going to stop,” Kothari said. “You’re going to continue to see that trend.”

Chemical Financial alone completed three acquisitions in the prior 15 months with deals for Holland-based Lake Michigan Financial Corp., the parent company of The Bank of Holland and The Bank of Northern Michigan, Monarch Community Bank in Coldwater, and Northwestern Bancorp in Traverse City.

In Grand Rapids, Mercantile Bank Corp. is open to making another acquisition following the 2014 deal for Firstbank Corp., Chairman and CEO Mike Price said last week.

[RELATED: Mercantile Bank remains open to pursuing another merger]

In response to a question during a conference call with analysts last week to discuss quarterly and annual results, Price indicated that there remains “a lot” of talk about bank M&A in the state.

“The fourth quarter is typically pretty quiet for M&A just because everybody is generally tied up with the holidays and more importantly year-ends and that type of thing,” Price said in the call. “So I would portray it at about the same level it was at the end of the third quarter and that is, there is a lot of activity, there is a lot of talking. But there is still some headway as far as what sellers in the state of Michigan are thinking that their franchises are worth and what we’re willing to pay and that’s a healthy discussion that goes back and forth.”

Editor’s note: This story has been updated from its original form. 

Read 5436 times Last modified on Sunday, 31 January 2016 21:45