BancorpSouth Bank and Cadence Bancorporation, the parent company of Cadence Bank, 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.

Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, Cadence shareholders will receive 0.7 shares of BancorpSouth Bank for each share of Cadence they own. Additionally, the agreement allows for a one-time special cash dividend to Cadence 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, with operations centers in Tupelo, MS, and Birmingham, AL, as well as specialty sites in Macon, GA; Starkville, MS; and Houston.

Dan Rollins will be the chairman and CEO and Paul Murphy will serve as executive vice chairman of the combined company. Chris Bagley will serve as president, Valerie Toalson will serve as CFO and Hank Holmes will serve as chief banking officer. The board of directors will initially be comprised of 20 directors, including 11 directors from BancorpSouth and nine from Cadence.

“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,” Rollins said. “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,” Murphy said. “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.”

The merger will lead to 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.

The transaction is expected to be immediately accretive to tangible book value per share at close.

Among a peer group of $30 billion to $60 billion in asset banks nationwide, the combined company is estimated to have the third best return on tangible common equity and efficiency ratio, based on consensus earnings estimates. In addition, the company will have a pro forma CET 1 ratio of 11.3% and ACL/loans of 2.5% estimated at the close of the transaction.

The merger is expected to close in Q4/21, subject to the satisfaction of customary closing conditions, including the receipt of customary regulatory approvals and approvals of shareholders of each company.

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 to Cadence.