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Webster Financial (WBS) Agrees to Acquire Ametros for $350M
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Webster Financial Corporation (WBS - Free Report) entered into an agreement to acquire Ametros Financial Corporation, a custodian and administrator of medical insurance claim settlements, in an all-cash deal worth $350 million. The transaction value is subject to customary adjustments.
The completion of the deal, subject to the satisfaction of the customary closing conditions and anti-trust review, is expected in the first quarter of 2024. Following the acquisition, Ametros will operate as a subsidiary of Webster Financial.
WBS' acquisition of Ametros is expected to enhance its expertise in healthcare financial services and provide a new source of non-interest income.
Moreover, the features of Ametros’ deposit balances add a significant value to WBS. Notably, its deposits are expected to witness a five-year compound annual growth rate of around 25%. It would also add low-cost and long-duration deposits to WBS’ deposit portfolio. Ametros’ deposits have an average cost of less than 10 basis points and an average duration of more than 20 years.
Over the past three years, Ametros’ deposits under custody have more than doubled and the average deposit balance per account was $33,000. As of December 2023, it had around $804 million in deposits under custody. This amount will become a part of WBS’ deposit balance post the closure of the deal.
Webster Financial's management anticipates the acquisition to be accretive to the Zacks Consensus Estimate for 2025 earnings by more than 2%. Also, it expects to generate an internal rate of return of more than 25% and recover its tangible book value dilution over a period of five years.
John Ciulla, the president and chief executive officer of Webster Financial stated, “This acquisition closely aligns with our strategic focus on building a diverse and unique funding base.”
He further added, “Ametros’ market position and value proposition for its clients and partners underpin a robust growth trajectory for this highly complementary business. Ametros builds on Webster’s history of developing non-traditional deposit verticals with a favorable financial profile, including HSA Bank and interLINK.”
WBS' shares have risen 35.1% over the past six months compared with the industry’s 15.3% growth.
In September 2023, Eastern Bankshares, Inc. (EBC - Free Report) , the stock holding company for Eastern Bank, entered into an all-stock merger deal with Cambridge Bancorp (CATC - Free Report) . Per the deal, CATC will merge with EBC. The completion of the deal, subject to the receipt of regulatory approvals by the shareholders of both companies, is expected in the first quarter of 2024.
Per the terms of the deal, which has been approved by the boards of both companies, Cambridge shareholders will receive 4.956 shares of Eastern common stock for each share of Cambridge common stock they own.
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Webster Financial (WBS) Agrees to Acquire Ametros for $350M
Webster Financial Corporation (WBS - Free Report) entered into an agreement to acquire Ametros Financial Corporation, a custodian and administrator of medical insurance claim settlements, in an all-cash deal worth $350 million. The transaction value is subject to customary adjustments.
The completion of the deal, subject to the satisfaction of the customary closing conditions and anti-trust review, is expected in the first quarter of 2024. Following the acquisition, Ametros will operate as a subsidiary of Webster Financial.
WBS' acquisition of Ametros is expected to enhance its expertise in healthcare financial services and provide a new source of non-interest income.
Moreover, the features of Ametros’ deposit balances add a significant value to WBS. Notably, its deposits are expected to witness a five-year compound annual growth rate of around 25%. It would also add low-cost and long-duration deposits to WBS’ deposit portfolio. Ametros’ deposits have an average cost of less than 10 basis points and an average duration of more than 20 years.
Over the past three years, Ametros’ deposits under custody have more than doubled and the average deposit balance per account was $33,000. As of December 2023, it had around $804 million in deposits under custody. This amount will become a part of WBS’ deposit balance post the closure of the deal.
Webster Financial's management anticipates the acquisition to be accretive to the Zacks Consensus Estimate for 2025 earnings by more than 2%. Also, it expects to generate an internal rate of return of more than 25% and recover its tangible book value dilution over a period of five years.
John Ciulla, the president and chief executive officer of Webster Financial stated, “This acquisition closely aligns with our strategic focus on building a diverse and unique funding base.”
He further added, “Ametros’ market position and value proposition for its clients and partners underpin a robust growth trajectory for this highly complementary business. Ametros builds on Webster’s history of developing non-traditional deposit verticals with a favorable financial profile, including HSA Bank and interLINK.”
WBS' shares have risen 35.1% over the past six months compared with the industry’s 15.3% growth.
Image Source: Zacks Investment Research
WBS presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Expansion Effort by Another Firm
In September 2023, Eastern Bankshares, Inc. (EBC - Free Report) , the stock holding company for Eastern Bank, entered into an all-stock merger deal with Cambridge Bancorp (CATC - Free Report) . Per the deal, CATC will merge with EBC. The completion of the deal, subject to the receipt of regulatory approvals by the shareholders of both companies, is expected in the first quarter of 2024.
Per the terms of the deal, which has been approved by the boards of both companies, Cambridge shareholders will receive 4.956 shares of Eastern common stock for each share of Cambridge common stock they own.