Valley National Bancorp (NASDAQ: VLY) is on the brink of closing its pending acquisition of Bank Leumi Le-Israel Corporation (Leumi). It has received the much-awaited regulatory approvals from the Bank of Israel and the New York State Department of Financial Services.
The deal, signed by the parties in September last year, is expected to conclude on April 1, 2022.
Shares of Valley National decreased 3.4% on Monday, closing the trading session at $12.91.
Valley National provides commercial and retail banking services as well as wealth management, and insurance services. It has three segments — Consumer Lending, Commercial Lending, and Investment Management. It is headquartered in New York. The company’s net interest income was $1.2 billion in 2021 while its assets were $43.4 billion exiting the year.
Past Announcements Related to Leumi Transaction
In January 2022, Valley National’s shareholders unanimously agreed (with 98% favorable voting) to the transaction.
Also, the same month, the acquisition was approved by the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
In September 2021, Valley National had signed an agreement to acquire Leumi for $1.15 billion. Valley National will pay $5.08 in cash and 3.8025 of its shares for every share of Leumi. Leumi is Bank Leumi USA’s parent company and the U.S. unit of Bank Leumi Le-Israel B.M.
The combined company, post the completion of the transaction, is anticipated to be one of the largest banks (publicly traded) in the U.S., considering its asset base. Its 14% stake will be with Bank Leumi Le-Israel B.M. and the rest with Valley National.
The acquisition is expected to boost Valley National’s presence in the commercial markets and enhance its technology and funding verticals. Accretion to Valley’s earnings is anticipated in 2023.
The Chairman, President, and CEO of Valley National, Ira Robbins, had then said, “We are extremely excited about the combination with Bank Leumi and the diverse growth opportunities that we expect the partnership will bring. 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. On the lending side, Bank Leumi will add diversification into niche C&I segments and new geographies including in California and Illinois.”
Analysts’ Take
Recently, David Chiaverini, an analyst at Wedbush, reiterated a Hold rating on Valley National and a price target of $15 (16.19% upside potential).
Valley National has a Moderate Buy consensus rating based on 1 Buy and 2 Holds. The average VLY price target of $15.33 suggests 18.75% upside potential from current levels. Over the past year, shares of Valley National have decreased 0.6%.
Risk Analysis
The TipRanks Risk Factors tool reveals that VLY stock is at risk mainly from two factors: Finance & Corporate and Legal & Regulatory. While the Finance & Corporate category contributes 24 risks to the total 45 risks identified for the stock, the Legal & Regulatory category accounts for 12 risks.
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