First Horizon National Corp. (FHN) and IberiaBank Corp. (IBKC) received the U.S. regulatory approval for their all-stock merger of equals.
The two banks said that the Board of Governors of the U.S. Federal Reserve System has given its green light to complete the deal. Under the terms of the merger agreement, IberiaBank shareholders will receive 4.584 shares of First Horizon for each IberiaBank share they own.
Shares in First Horizon rose 4.7% to $10.79 in Tuesday’s pre-market trading. IberiaBank dropped 4.7% to $44.96.
Upon closure of the transaction, about 56% of the combined company will be held by First Horizon shareholders and about 44% will be held by IberiaBank shareholders.
The combined bank will be one of the largest financial services companies headquartered in the Southeast of the U.S. and one of the top 25 banks in the U.S. in terms of deposits.
“First Horizon and IberiaBank together will be well positioned to navigate a changing financial services landscape, deliver superior client solutions, strengthen the communities we serve and create strong returns for our shareholders,” said First Horizon Chairman and CEO Bryan Jordan.
The combined company will operate under the First Horizon National Corp. name, and common shares will trade on the New York Stock Exchange. It will be headquartered in Memphis. The headquarters of the combined regional banking business will be located in New Orleans.
Shares in First Horizon have been hard hit this year dropping some 38%. Merrill Lynch analyst Ebrahim Poonawala this month raised the stock’s price target to $14 (36% upside potential) from $12 and maintained a Buy rating on the bank.
Meanwhile, the $11.69 average price target set by analysts implies 10% upside potential in the shares over the coming year. (See First Horizon stock analysis on TipRanks). The stock scores 8 Buy ratings versus 1 Hold rating from Wall Street analysts adding up to a Strong Buy consensus.
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