Mechanics Bank in Walnut Creek, Calif., has agreed to buy Rabobank in Roseville, Calif.
The $6 billion-asset Mechanics Bank said in a press release Friday that it will pay $2.1 billion for the $13 billion-asset Rabobank’s retail, business banking, commercial real estate, mortgage and wealth management businesses. Rabobank’s food and agribusiness assets will transfer to Rabo AgriFinance, a Rabobank affiliate in St Louis.
It is the third-biggest bank merger announced this year by overall deal value.
Mechanics is majority owned by Ford Financial Fund II.
The combined bank, which would operate as Mechanics, will have 144 branches and $17 billion in assets.
The acquisition "gives us a great opportunity to fill an established gap between the big banks and smaller community banks throughout the state,” John DeCero, Mechanics' president and CEO, said in the release.
“We are two established institutions with values and principles that align closely," DeCero added. "There’s very little geographic overlap and significant potential for value creation for both parties to this combination.”
Rabobank Group, Rabobank's Dutch parent, will own 9.9% of Mechanics' outstanding shares.
“This is a unique opportunity to merge two high-performing consumer and commercial banks with common values and deep roots in California,” said Mark Borrecco, Rabobank's CEO. “Both organizations take pride in putting their customers first and possess a strong sense of community.”
The deal is expected to close in the third quarter.
Lazard Freres and Sullivan & Cromwell advised Rabobank. Credit Suisse Securities and Wachtell, Lipton, Rosen & Katz advised Mechanics.
