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April 28, 2021

Banking market weekly snapshot: 56% increase in deals to see off April

By Hannah Wright

From 18 April 2021 to 24 April 2021, there were 39 deals across the banking sector, representing a 56% increase from the previous weeks total of 25. Of the deals, there were 28 acquisitions, 5 asset transactions and 6 mergers.

Most notably last week, Webster Financial Corporation entered into a definitive agreement to merge with Sterling Bancorp, a bank holding company offering banking and financial services, for a value of $5.31bn on 16 April 2021 in North America.

Under the terms of the agreement, Sterling will merge into Webster, and Sterling’s shareholders will receive a fixed exchange ratio of 0.463 Webster shares for each share of Sterling stock they own.

Following the closing of the transaction, Webster shareholders will own approximately 50.4% of the combined company, and Sterling shareholders will own approximately 49.6%, on a fully diluted basis.

The merger will allow the companies to provide additional banking services. In a statement from Webster, the firm revealed hopes that uniting the banks would create a Northeast powerhouse with $63bn in assets and $52bn in deposits.

Jack L. Kopnisky, president & CEO of Sterling, commented: “Webster and Sterling have much in common: distinguished client service, diversity of revenue, funding sources and assets, and disciplined capital allocation. The increased capabilities and scale of our two organizations are attractive propositions for our clients, communities, shareholders and colleagues.”

The merger is expected to close in the fourth quarter of 2021, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approval by the shareholders of each company.

Also in the US, Deluxe Corp, a provider of technology-enabled solutions, announced plans to acquire 100% of First American Payment Systems for $960m on 22 April.

First American Payment Systems is a provider of payment processing services to merchants, banks, and associations.

Barry McCarthy, president and CEO of Deluxe, explained the significance of the acquisition: “This is a major, logical and responsible next step in our transformation.

“With electronic payments playing an increasingly important role across the economy, the addition of First American’s independent, leading payments platform will advance our One Deluxe strategy and our overall growth trajectory.”

The transaction is expected to close in the second quarter of 2021.

In China, DBS Group, a Singapore-based provider of financial services, acquired a 13% stake in Shenzhen Rural Commercial Bank for $813.65m on 21 April.

As a part of transaction, DBS Group Holdings will acquire 1.35bn new shares in Shenzhen Rural Commercial Bank at a price of CNY3.91 ($0.6) per share. The transaction enables DBS Group Holdings to accelerate its expansion in China’s Greater Bay Area.

Coastal South Bancshares, a provider of commercial banking services for retail and institutional customers, has announced plans to merge with Cornerstone Bancshares, a provider of banking services. Both the companies are based in the US.

Based on CoastalSouth Bancshares’s closing share price of $18 on April 22, 2021, the transaction is estimated to be valued at approximately $143.82m. The transaction is expected to close in the third quarter of 2021.

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