The shareholders of First Horizon National Corp. (NYSE: FHN) and IBERIABANK Corporation (NASDAQ: IBKC) have officially approved the merging of the companies.
First Horizon National Corp. is a Memphis-based bank, which announced the green light on the 24th of April. This merger has been in anticipation for almost a year, since November 2019 to be precise. It is a huge deal for both of the businesses as once the merger completes it is anticipated to become one of the top 25 banks in the whole United States of America based on the deposits.
Bryan Jordan, the chairman and the CEO of First Horizon has stated in the first release:
“We are pleased that our shareholders strongly support our plan to merge our two complementary franchises,” Adding that “As a combined company, we will have an expansive 11-state reach in high-growth, attractive markets across our combined footprint. When we complete the integration of our company in 2021, we will be better positioned to deliver the innovative products and technology our customers have come to expect from us. We are both community-focused, service organizations. Our teams look forward to using our combined resources to better serve our customers and support our communities.”
Lots of traders are going to be eager to invest in both of the companies willing to sell the assets at a later stage to make big monetary gains after the merger is complete and the bank ranks higher making their stocks much attractive to even people who are trading with currency quotes since it is a very reliable and mostly safe investment. All of this is due to the fact that the stockholders are bound to receive 4.584 shares of the First Horizon common stock per each IberiaBank common stock. This is even more interesting since due to the novel coronavirus both of the banks’ stocks are suffering a bit of a drawback making it a sweet spot to buy up the assets to sell them at a later stage once everything recovers. According to leading brokerages, chief among them Axiory, this is a very textbook response to a merger of two listed companies. The shareholders themselves being skeptical just fuels the speculation of retail traders themselves. The stock delegation was agreed upon during the merger agreement process. It is also worth noting that the merged company will keep the name of First Horizon and continue operating from its headquarters in Memphis, although the HQ for the regional banking businesses will be in the New Orleans area. Although Daryl Byrd, the president and the CEO of IberiaBank will serve as an executive chairman of the combined company.
The merger process of these companies involves some notorious names like Morgan Stanley & Co. LLC as the financial advisor and Sullivan & Cromwell LLP as the legal counsel for the First horizon with Keefe, Bruyette & Woods, and Goldman Sachs being financial advisors and Thatcher & Bartlett LLP legal counselors to IberiaBank. First Horizon Bank has been netting huge revenues in deposits at the end of 2019 making it the number 1 most profitable bank in the Memphis area with $32.81 billion in the deposits as of 31st December 2019.
It is also worth noting that the newly merged First Horizon Bank will keep IberiaBank’s 136,000-square-foot building after the merger is finished at the end of the second quarter of 2020. The building is currently housing more than 200 associates as well as tenants. IberiaBank is a huge company employing 342 people in Lafayette and 515 more in New Orleans.
Both of the companies are known to be big players in their own communities. There have been many questions as to how the merged company will continue their work with the communities, however, Byrd has put these concerns to rest stating:
“The two companies, both of us have strong histories of community involvement, […] I think we will be a very active community player going forward. I wouldn’t expect a lot of change going forward.”
There have been some interruptions though. Mainly due to the novel coronavirus pandemic, which has caused most of the world to lockdown including the United States of America going through extremely hard times with more than 1 million infected, the banks have announced that they are still expecting to merge at the end of the second quarter, however, the previously announced acquisition of 30 SunTrust Bank branch offices will most probably be postponed to the third quarter. The CEO of the First Horizon Bank Jordan has briefly spoken about this matter:
“The postponement will alleviate customer disruption in this uncertain time and allow us to comply with social distancing guidelines,” putting any concerns to rest by adding that “We believe both of these transactions will enhance our long-term value.“
The potential loses have also been addressed:
“While these are clearly unusual times, I believe we are well prepared to deal with the fallout of COVID-19, […] We have a strong capital liquidity base, we’ve maintained consistently strong underwriting standards and have built a diversified portfolio that is focused on profitability and our loan loss allowance is strong. We have good expense controls in place, and very importantly, we have solid underlying earnings power.”
One of the most important parts of the agreement is that both of the entities are merging as equals with IberiaBank being leading the company’s regional financial services with $75 billion in its assets.