BancorpSouth Bank in Tupelo, Miss., has agreed to buy Cadence Bancorp. in Houston, a deal that will create a $44 billion-asset bank in the Southeast.
The $24 billion-asset BancorpSouth said in a press release Monday that it will pay about $2.8 billion in stock for the $18.7 billion-asset Cadence, based on the seller’s shares outstanding on March 26 and BancorpSouth’s closing stock price on Friday. The deal is expected to close in the fourth quarter.
Cadence will also be allowed to pay its shareholders a one-time special cash dividend of $1.25 a share in conjunction with the merger’s closing.
It is the second-biggest bank deal announced this year, behind only the proposed merger of M&T Bank and People's United Financial.
BancorpSouth and Cadence will select a new company name that reflects both brands. The bank will operate under the Cadence brand. The company will have dual headquarters in Tupelo and Houston.
The bank will have $29 billion of loans and $37 billion of deposits.
Dan Rollins, BancorpSouth’s chairman and CEO, will keep those titles. Paul Murphy, Cadence’s chairman and CEO, will become executive vice chairman. Eleven of the company’s 20 directors will come from BancorpSouth.
“Cadence has built an impressive commercial banking franchise that, when combined with the strengths of our team at BancorpSouth, seems to be a perfect fit,” Rollins said in the release.
The merger “will allow us to expand our reach and offerings with minimal overlap in our existing branch network,” Rollins said. “Culturally speaking, our mission and values align really well together. Mergers are all about people, and what's important to note here is that our leadership teams are in sync.”
"I am thrilled to partner with BancorpSouth," Murphy said in the release. "I have great respect for the franchise they have built over the last 145 years, beginning in my home state of Mississippi. The BancorpSouth community banking franchise is top tier and complements Cadence's expertise in middle-market commercial banking seamlessly.”
BancorpSouth said it expects the deal will be 17% accretive to its 2022 earnings per share, assuming all cost-cutting goals are reached. The deal should be immediately accretive to BancorpSouth’s tangible book value per share.
BancorpSouth said it plans to cut $78 million of annual noninterest expenses, or about 7.3% of the combined company’s operating costs. The company expects to incur $125 million of merger-related expenses.
Keefe, Bruyette & Woods, Sullivan & Cromwell and Alston & Bird advised BancorpSouth. Goldman Sachs, J.P. Morgan, Piper Sandler and Wachtell, Lipton, Rosen & Katz advised Cadence.
