TCF Financial-Chemical Financial Deal Gets Shareholder Vote
Zacks Investment Research | Jun 10, 2019 08:50AM ET
The all-stock merger deal between TCF Financial Corporation (NYSE:TCF) and Chemical Financial Corporation (NASDAQ:CHFC) has received the necessary consent of the respective shareholders. The deal was announced in January 2019 and is expected to close in the third quarter or early fourth-quarter 2019.
TCF chairman and chief executive officer Craig R. Dahl said, “This positive shareholder response demonstrates a broad recognition of the shared strategic vision and complementary strengths of the two organizations.”
Brief Background on Merger
Per the terms of the merger deal, TCF Financial will merge into Chemical Financial. The combined holding company and bank will be headquartered in Detroit, MI, and operate under the TCF name.
TCF shareholders will be eligible to receive 0.5081 shares of Chemical Financial common stock for each share of TCF common stock based on a fixed exchange ratio, equivalent to $21.58 per TCF share, based on the closing price as of Jan 25, 2019.
Also, each outstanding share of 5.70% Series C Non-Cumulative Perpetual Preferred Stock of TCF Financial will be converted into the right to receive one share of a newly created series of preferred stock of Chemical.
Upon completion of the deal, TCF Financial and Chemical Financial shareholders will own 54% and 46% of the combined company, respectively, on a fully diluted basis. The combined company’s board of directors will have 16 directors — eight from TCF Financial and Chemical Financial each.
Financial Benefits of the Deal
The merger is expected to be 17% and 31% accretive to earnings per share of Chemical Financial and TCF Financial, respectively, by 2020.
On a pro-forma basis, the business is expected to deliver top-tier operating and return metrics with cost savings on a fully-phased in basis, which includes Return on Average Tangible Common Equity of nearly 19%, Return on Average Assets of about 1.6% and Efficiency ratio of approximately 53%.
The transaction is expected to generate approximately $180 million in annual run-rate cost synergies by 2020, with minimal reduction in branches.
Our Take
The latest acquisition seems to be befitting and is likely to support TCF Financial’s prospects. Notably, restructuring efforts help it reallocate capital in core markets served. The company’s investments in technology in order to improve customer experience should bode well in the long term.
However, declining fee income and persistent rise in expenses might deter bottom-line expansion of the company.
Shares of TCF Financial have recorded a slight gain so far this year compared with 5.6% growth of the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.