Synovus Obtains Regulatory Nod To Buy Cabela's Financial Arm
Zacks Investment Research | Sep 07, 2017 09:53PM ET
Synovus Bank, a wholly owned subsidiary of Synovus Financial Corp. (NYSE:SNV) , received the regulatory approval from the Board of Governors of the Federal Reserve System to acquire certain assets and liabilities of World's Foremost Bank. Notably, World's Foremost Bank is a wholly owned subsidiary of Cabela’s Incorporated (NYSE:CAB) .
Per the agreement, announced in April 2017, Synovus will subsequently resell the credit card portfolio to Capital One Financial Corporation (NYSE:COF) upon closure and hold back about $1.2 billion brokered time deposit portfolio. Synovus will receive $75 million from Cabela’s and Capital One.
Earlier, Capital One had entered into a deal to buy the above-mentioned banking unit. However, as the company was undergoing an anti-money-laundering controls’ probe leading to delayed regulatory approvals, the deal was terminated.
Nonetheless, the deal is subject to the completion of the merger of Cabela’s and Bass Pro Shops which has received regulatory approval as well as the nod from Cabela’s shareholders. As per the deal, Bass Pro will acquire Cabela’s for $61.50 per share in cash, representing an aggregate transaction value of approximately $5 billion. The merger is likely to close before Oct 3, 2017.
At the time of announcement of the transaction, Kessel D. Stelling, Synovus’ chairman and CEO, was optimistic as the deal will likely to provide additional liquidity for organic growth. This, in turn, will help the company in achieving long-term targets, which include return on assets of 1% and efficiency ratio to remain lower than 60%.
Synovus’ shares gained around 24.1% over the last 12 months as compared with 19.9% growth recorded by the Original post
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