Valley National buying Bank Leumi USA for $1.15 billion

For the second time this week, a regional U.S. banking company has struck a deal to acquire the U.S. arm of a foreign-owned bank.

Early Thursday, Valley National Bancorp in New York announced that it is buying Bank Leumi USA, a unit of Bank Leumi Le-Israel Corp., for about $1.15 billion in cash and stock.

The announcement comes just two days after the Japanese banking giant Mitsubishi UFJ Financial Group announced it is selling its U.S. subsidiary, MUFG Union Bank, to U.S. Bancorp for $8.1 billion. Since late last year, Spain’s Banco Bilbao Vizcaya Argentaria and London-based HSBC Holdings have also struck deals to sell much of or all of their U.S. operations to U.S.-based banks.

Bank Leumi had reportedly been on the block for several months and Bloomberg reported in late August that the $41 billion-asset Valley National was the front-runner.

Bank Leumi USA is primarily a private and middle-market commercial bank. It is based in New York, but also has commercial lending operations in Chicago, Miami, Los Angeles and Palo Alto, California. It has about $8.4 billion of assets, $7.1 billion of deposits and $5.4 billion of loans.

When the deal is completed next year, Valley National would be one of the nation's 30 largest commercial banks.

“We are extremely excited about the combination with Bank Leumi and the diverse growth opportunities that we expect the partnership will bring,” Ira Robbins, Valley's chairman, president and CEO, said in a news release. “Bank Leumi’s unique deposit verticals, including the technology and venture capital business, will continue the significant funding improvement that we have driven over the last few years.”

Under terms of the agreement, Leumi shareholders of Leumi will receive 3.8025 shares of Valley common stock and $5.08 in cash for each share of Leumi common stock they own. When the deal is completed next year, Bank Leumi Le-Israel would own more than 14% of Valley’s common stock.

Morgan Stanley served as financial advisor to Valley and Wachtell, Lipton, Rosen & Katz served as its legal counsel. Piper Sandler served as financial advisor to Leumi, and Davis Polk & Wardwell and Meitar & Co. served as its legal counsel.