WesBanco agreed to acquire Farmers Capital Bank, with both boards of directors unanimously approving the transaction. The merger is expected to qualify as a tax-free reorganization.
Todd F. Clossin, president and CEO of WesBanco, said, “The merger with Farmers significantly expands WesBanco’s existing franchise within Kentucky, and bridges the gap between our Louisville-Southern Indiana and our recently enhanced Southeast Ohio-Huntington, West Virginia markets. We believe we can provide customers of Farmers with a broader array of banking services, including expanded commercial and mortgage lending capabilities as well as enhanced wealth management solutions.”
Upon completion of the merger, WesBanco will add one Farmers director to its board of directors, with all other current Farmers’ directors being appointed to an advisory board for the Central and Southern Kentucky market. Lloyd C. Hillard, Jr., Farmers’ president and CEO, will join WesBanco as chairman for the Central & Southern Kentucky market advisory board.
Under the terms of the agreement, WesBanco will exchange a combination of its common stock and cash for Farmers common stock. Farmers shareholders will be entitled to receive 1.053 shares of WesBanco common stock and cash in the amount of $5.00 per share for each share of Farmers common stock for a total value of approximately $378.2 million in aggregate based on WesBanco’s market close on April 18, 2018. The transaction values Farmers at a price to March 31, 2018 tangible book value per share of 195%, and a price to mean analyst estimated 2018 earnings per share of 17.8 times.
Excluding certain one-time merger charges, the transaction is anticipated to be approximately 3% accretive to earnings in 2019, and approximately 5% accretive to earnings in 2020 once anticipated cost savings are fully phased-in. Estimated tangible book value dilution at closing of approximately 2.1% is expected to be earned back in approximately 2.4 years using the “cross-over” method, including estimated pre-tax merger-related charges of $22.3 million.
The acquisition is subject to regulatory and Famers shareholder approval and is expected to close in the second half of 2018. After closing, WesBanco will have approximately $12.8 billion in total assets and will provide banking and financial services through 211 financial centers in five states.
Raymond James & Associates represented WesBanco on the transaction, while Phillips Gardill Kaiser & Altmeyer served as its legal advisor. Keefe, Bruyette & Woods represented Farmers, with Squire Patton Boggs acting as legal advisor.
