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Cadence (CADE) to Sell 7 Bank Branches to First Bancshares

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Cadence Bancorporation (CADE - Free Report) has entered an agreement to divest its seven branches in Northeast Mississippi to The First, A National Banking Association, subsidiary of The First Bancshares, Inc. (FBMS - Free Report) . This is in line with the joint Letter of Agreement entered between Cadence and BancorpSouth Bank (BXS - Free Report) with the United States Department of Justice’s Antitrust Division in relation to the pending merger of BancorpSouth and Cadence.

First Bancshares is expected to assume around $450 million in deposits at a premium of $1 million and acquire $42 million in loans at par value, the real estate associated with purchased branches at their appraised value, and other assets related with the branches at book value.

Per the agreement, the transaction must be executed within 180 days, following the merger between BancorpSouth and Cadence. The merger is expected to close in fourth-quarter 2021, subject to the satisfaction of customary closing conditions.

While the agreement advances the merger between the companies, it also strengthens First Bancshares’ presence in Mississippi, making the deal a strategic fit. Per Hoppy Cole, president and CEO of First Bancshares, “We are excited about growing our company’s presence in our home state of Mississippi with the addition of seven locations in Starkville, West Point, and Aberdeen.”

Notably, BancorpSouth and Cadence have been making solid strides with their merger. Early last month, shareholders of BancorpSouth approved the all-stock merger deal with Cadence. The combination will create a $46-billion institution on a pro-forma basis.

Per the 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 the earnings per share of both companies by the end of 2022, assuming fully realized cost savings.

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%.

In the past year, shares of Cadence have jumped 118.6% compared with 67.8% growth of the industry it belongs to.

 

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

The banking sector has been witnessing an increase in mergers and acquisition activities to dodge the heightened costs of regulatory compliance and increased investments in technology in a bid to be competitive.

On Aug 27, 2021, Investors Bancorp, Inc. (ISBC - Free Report) closed the previously-announced acquisition of eight New Jersey and eastern Pennsylvania branches of Berkshire Bank, the wholly-owned subsidiary of Berkshire Hills Bancorp, Inc.