MB Financial and Taylor Capital Group said they have signed a definitive merger agreement whereby MB Financial will acquire Taylor Capital. Taylor Capital is the holding company of Cole Taylor Bank, a commercial bank headquartered in Chicago with $5.9 billion in assets, $3.3 billion in loans and $3.7 billion in deposits as of June 30, 2013. MB Financial is the $9.4 billion Chicago-based holding company of MB Financial Bank.
The transaction is expected to nearly double MB Financial’s middle-market commercial banking market share in the Chicago area. Taylor Capital’s nine branches complement MB Financial’s existing network of 85 Chicago-area branches. The combined bank is expected to have a top-ten deposit market share ranking in the Chicago MSA and top-five deposit market share ranking in Cook County, the companies said.
“The merger of Taylor Capital and MB Financial is a terrific strategic transaction. Each side brings a strong middle market commercial banking business as well as significant national niche businesses,” stated Mitchell Feiger, president and chief executive officer of MB Financial.
“MB Financial Bank, which was founded in 1911, and Cole Taylor Bank, established in 1929, have been serving their customers and Chicago communities for generations, and we look forward to building on that long history and tradition together in the future,” said Bruce W. Taylor, Taylor Capital’s chairman of the board.
“We are proud to be joining the MB Financial organization, one that has a remarkably similar culture and values as ours. Having fulfilled the strategic and operating objectives that we have been pursuing over the past five years, we undertook a thorough review of our options for the future and determined without reservation that this path is clearly in the best long-term interests of our shareholders, clients, employees and the communities that we serve,” said Mark A. Hoppe, president and chief executive officer of Taylor Capital. “In MB Financial, we knew we would find bankers of a like business philosophy, who are intensely focused on satisfying customers’ financial needs and maintaining strong commitments to the Chicago community and to the national markets we serve. We are proud of the strong franchise we built and are very pleased to be a part of the exciting future of the combined organization.”
The per share merger consideration is currently valued at approximately $22.00 per Taylor Capital share, resulting in an overall transaction value of approximately $680 million, inclusive of stock option, warrant and restricted stock cash-outs. Upon completion of the merger, each share of Taylor Capital common stock and nonvoting preferred stock will be converted into the right to receive (1) 0.64318 shares of MB Financial common stock and (2) $4.08 in cash, representing an aggregate consideration mix of approximately 81% MB Financial stock and 19% cash. The stock portion of the merger consideration is expected to be generally tax-free. Shares of Taylor Capital’s Perpetual Non-Cumulative Preferred Stock, Series A, will be exchanged for shares of MB Financial preferred stock with substantially identical terms. The merger agreement provides that any shares of Taylor Capital’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B, that are not redeemed by Taylor Capital prior to the merger will be redeemed by MB Financial at the time of or promptly after the merger.
The merger is subject to regulatory approvals, approval by MB Financial stockholders, approval by Taylor Capital stockholders and certain other customary closing conditions and is expected to close in the first half of 2014. The merger is expected to be immediately accretive to MB Financial’s annual GAAP and cash EPS.
Hoppe will become president and chief executive officer of MB Financial’s subsidiary bank, MB Financial Bank. Upon completion of the merger, Jennifer W. Steans and C. Bryan Daniels from Taylor Capital’s board of directors will join the MB Financial board.
The definitive agreement was unanimously approved by the boards of directors of MB Financial and Taylor Capital.
J.P. Morgan Securities is acting as financial advisor to MB Financial and Silver, Freedman & Taff is serving as its legal counsel with respect to the transaction. Taylor Capital is being advised by Sandler O’Neill & Partners and Barack Ferrazzano Kirschbaum & Nagelberg is acting as its legal counsel.