Back to top

Image: Bigstock

BancorpSouth (BXS) Gets Shareholders Nod for Cadence (CADE) Deal

Read MoreHide Full Article

Shareholders of BancorpSouth Bank have approved the all-stock merger deal with Cadence Bancorporation (CADE - Free Report) . The transaction, announced this April, is expected to close in the fourth quarter of 2021 subject to regulatory consents.

The deal will create a leading Texas and Southeastern regional bank. Post completion, the combined entity will operate under the name and brand of Cadence, and is expected to have a market value of more than $6 billion. Full integration is anticipated to take place in the second half of 2022.

Per the previous release in April, each common shareholder of Cadence will get stock equivalent to 0.70 of BancorpSouth share. Also, they will be entitled to a one-time special cash dividend of $1.25 per share in conjunction with the closing of the merger. Post the closure of the transaction, BancorpSouth shareholders will own about 55% of the combined company, while Cadence shareholders will own 45%.

Coming to leadership, Dan Rollins will be the chairman and CEO, and Paul Murphy will serve as the executive vice chairman of the combined entity. The board of directors will initially comprise 20 directors, consisting of 11 from BancorpSouth and nine from Cadence.

As per previous disclosure, both firms foresee long-term financial benefits from the transaction, which seems attractive for shareholders. The deal is likely to be 17% accretive to earnings per share (EPS) of both companies by the end of 2022, assuming fully-realized cost savings. The EPS is projected to be 14% accretive if 75% cost savings are realized.

Also, immediate accretion to tangible book value per share at close is expected. Management estimates pro forma CET 1 ratio of 11.3% and ratio of allowance for credit losses to loans of 2.5% at the close of the transaction.

Our Take

In the current scenario, banks are moving toward consolidation to dodge the heightened costs of regulatory compliance and increased investments in technology in a bid to remain competitive. The current low-rate scenario and other economic challenges following the pandemic have taken a toll on banks’ profitability.

The merger between BancorpSouth and Cadence is anticipated to lead to increased growth prospects and creation of shareholder value.

Shares of Cadence have gained 3.6%, as against the 6.3% fall witnessed by shares of BancorpSouth, over the past six months.

Zacks Investment Research
Image Source: Zacks Investment Research

Currently, both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similarly last week, shareholders of New York Community Bancorp, Inc. (NYCB - Free Report) and Flagstar Bancorp, Inc. approved the proposed all-stock merger deal between the two companies. The transaction, also announced this April, is expected to close in the fourth quarter of 2021, subject to regulatory consents. The merger is likely to boost the New York Community Bancorp’s transformation strategies through geographical as well as product diversification.


Unique Zacks Analysis of Your Chosen Ticker


Pick one free report - opportunity may be withdrawn at any time


New York Community Bancorp, Inc. (NYCB) - $25 value - yours FREE >>

Cadence Bank (CADE) - $25 value - yours FREE >>

Published in