BancorpSouth (BXS) to Combine with Cadence Bancorporation (CADE)

April 12, 2021 6:32 AM EDT

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BancorpSouth Bank (NYSE: BXS) ("BancorpSouth") and Cadence Bancorporation (NYSE: CADE) ("Cadence"), the parent company of Cadence Bank, N.A., jointly announced today that they have entered into a merger agreement under which the companies will combine in an all-stock merger with a total market value of more than $6 billion to create a leading Texas and Southeastern regional bank.

Under the terms of the merger agreement, which was unanimously approved by the Boards of Directors of both companies, Cadence shareholders will receive 0.70 shares of BXS for each share of CADE they own. Additionally, the agreement allows for a one-time special cash dividend to CADE shareholders of $1.25 per share in conjunction with the closing of the merger. BancorpSouth shareholders will own approximately 55% and Cadence shareholders will own approximately 45% of the combined company.

The company will combine the aesthetics of both brands and logos and operate as Cadence Bank. The bank will have dual headquarters in Tupelo, MS and Houston, TX, with operations centers in Tupelo, MS and Birmingham, AL as well as specialty sites in Macon, GA; Starkville, MS; and Houston, TX.

Dan Rollins will be the Chairman and Chief Executive Officer and Paul Murphy will serve as Executive Vice Chairman of the combined company. The board of directors will initially be comprised of 20 directors – 11 from BancorpSouth and nine from Cadence.

Dan Rollins commented: "Cadence has built an impressive commercial banking franchise that when combined with the strengths of our team at BancorpSouth seems to be a perfect fit. This strategic merger will allow us to expand our reach and offerings with minimal overlap in our existing branch network. Culturally speaking, our mission and values align really well together. Mergers are all about people, and what's important to note here is that our leadership teams are in sync. By joining forces, it's easy to see that we'll be able to make a significant impact on our customers and communities while driving long-term shareholder value."

"I am thrilled to partner with BancorpSouth," said Paul Murphy. "I have great respect for the franchise they have built over the last 145 years, beginning in my home state of Mississippi. The BancorpSouth community banking franchise is top tier and complements Cadence's expertise in middle-market commercial banking seamlessly. We look forward to delivering significant value to our shareholders, driven by meaningful synergies and our shared banking philosophy to put the client first. I was impressed with the team at BancorpSouth early on, and I grow even more so the more I get to know them. Like us, they really care about their people. The scale of our combined bank, our collective talent, our similar cultures and our footprint in some of the fastest-growing markets in the country have us extremely excited about the future."

Strategically Compelling for Both Organizations

  • Builds a stronger banking franchise with relationship-focused financial services and better opportunities for employees, customers, communities and shareholders.
  • Builds immediate scale in highly attractive markets throughout Texas and the Southeast. Creates the 5th largest bank headquartered in the combined nine-state footprint, with presence in seven of the top ten largest MSAs therein.
  • Combines BancorpSouth's community banking focus with Cadence's commercial banking expertise.
  • Merges two historic institutions – BancorpSouth and Cadence have 145 and 134 years of experience, respectively.
  • Positions the company for continued growth. Strengthens balance sheet, capital, and reserve levels, enabling continued growth trajectory.
  • Low-risk combination. Thorough mutual diligence performed on all key business areas with conservative overlay. Both companies have significant M&A integration expertise.

Financially Attractive Metrics for Shareholders

  • Significant earnings per share accretion. 17% accretion to each of BancorpSouth's and Cadence's earnings per share in 2022 (assuming fully realized cost savings for illustrative purposes) and 14% if 75% of cost savings are realized.
  • Tangible book value accretive. Transaction expected to be immediately accretive to tangible book value per share at close.
  • Leading pro forma profitability. Among a peer group of $30-$60 billion in asset banks nationwide, the combined company is estimated to have the 3rd best return on tangible common equity and efficiency ratio, based on consensus earnings estimates.
  • Robust capital and reserve coverage. Pro forma CET 1 ratio of 11.3% and ACL / loans of 2.5% estimated at the close of the transaction.

Beneficial for Customers, Communities and Employees

  • Expands breadth of products and services available to customers.
  • The combined companies will be able to make more investments in customized technology solutions.
  • Environmental, social and governance principles are embedded in both cultures.
  • Employees of the combined companies invested more than 24,000 service hours towards improving their communities.

Executive Leadership

  • Dan Rollins, Chairman and Chief Executive Officer
  • Paul Murphy, Executive Vice Chairman
  • Chris Bagley, President
  • Hank Holmes, Chief Banking Officer
  • Valerie Toalson, Chief Financial Officer

Approval and Timing

The merger is expected to close in the fourth quarter of 2021, subject to the satisfaction of customary closing conditions, including the receipt of customary regulatory approvals and approvals of shareholders of each company.

Transaction Advisors

Keefe, Bruyette & Woods, A Stifel Company, served as exclusive financial advisor to BancorpSouth, with Sullivan & Cromwell and Alston & Bird serving as legal advisors.

Goldman Sachs and J.P. Morgan served as lead financial advisors to Cadence and Piper Sandler also advised. Wachtell, Lipton, Rosen & Katz served as legal advisor.

Joint Investor Call

There will be a joint investor call to discuss the transaction at 7:30 a.m. Central Time today. To listen to the call live, please dial 1 (866) 364-3826 within the U.S., 1 (855) 669-9657 within Canada, and 1 (412) 902-4212 for all other locations, and enter 8434848 as the access code. The live webcast, along with the related presentation, will be available at https://www.webcaster4.com/Webcast/Page/968/40840.



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