- Creates a premier bank in the Midwest
with $45 billion in assets
- Enhances competitive position by
delivering the scale, profitability and predictable performance
required to compete and win in an evolving market
- Merger combines two complementary
platforms – strengthening each company’s standalone growth
profile
- EPS accretion, relative to consensus
estimates, of 17% to Chemical shareholders and 31% to TCF
shareholders; 2.7-year tangible book value per share earn back
- Combined company retains shared values
including deep community ties, customer-centric focus and
commitment to performance
- Significant operation centers in
Minneapolis, Midland and Chicago
Chemical Financial Corporation (“Chemical”) (NASDAQ: CHFC) and
TCF Financial Corporation (“TCF”) (NYSE: TCF) today announced the
signing of a definitive agreement under which the companies will
combine in an all-stock merger of equals transaction. Under the
terms of the agreement, which was unanimously approved by the
boards of directors of both companies, TCF will merge into
Chemical, and the combined holding company and bank will operate
under the TCF name and brand following the closing of the
transaction.
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the full release here:
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The merger combines two complementary banking platforms to
create a premier Midwest bank that will be uniquely positioned to
capitalize on market opportunities and broaden the channels and
customers it serves through increased scale and expanded product
offerings. The combined company will have approximately $45 billion
in assets, $34 billion in total deposits and more than 500 branches
across nine states, including four of the top 10 Midwest markets.
It will leverage the strengths of Chemical’s community banking and
wealth management capabilities with TCF’s large deposit franchise
and expertise in wholesale lending on a national basis.
“With a shared strategic vision and increased scale and
capabilities, our two complementary banking platforms will be
positioned to better serve our customers and communities,” said
Chemical’s Chairman Gary Torgow. “The combination of TCF and
Chemical creates the largest midcap bank in the Midwest, poised to
deliver double-digit EPS accretion for each set of shareholders,
significant cost synergies, top-tier return metrics, a more
diversified balance sheet and a lower risk profile. We also
share a deep commitment to supporting and giving back to the
communities we serve.”
TCF Chairman, CEO and President Craig Dahl said, “We are
confident that this merger will enhance our ability to deliver
stronger and more sustainable growth and greater value creation
than either company could achieve alone. The new TCF will have
attractive positions in both its product suite and market footprint
as well as a more diversified loan portfolio and increased lending
capabilities across asset classes, geographies and industry
verticals. Through improved profitability and earnings
predictability, we will be able to reinvest in the business to
drive multiple growth engines, enhance our ability to compete in
the next generation of banking and sustain consistent return on
capital for shareholders. We believe the combined company will also
create new opportunities for our employees and enable us to attract
and retain top talent.”
Strategic Benefits of the
Merger
Enhanced scale and capabilities: The combined
organization will be strategically positioned to capitalize on
market opportunities and better serve its customers throughout
several of the largest, most attractive markets in the Midwest.
Together, the companies will have the scale to better invest,
compete and outperform by leveraging leading market positions and
complementary products. Limited overlap of markets and product
suites will benefit customers through a consistent go-to-market
approach and minimal disruption.
Accelerates achievement of each company’s strategic
priorities: Complementary operations with limited overlap will
broaden the opportunities to drive sustainable growth and increase
market share. TCF’s strength in national lending verticals
complements Chemical’s core in-market commercial lending and wealth
management offerings. The two banks’ shared strengths in
infrastructure, digital platforms, and mortgage banking will
enhance the combined organization’s position while improving
efficiency.
More balanced deposit mix and loan portfolio: The
combination creates a more diversified deposit mix between retail
and commercial business lines and a more balanced loan portfolio
across geographies, asset classes and commercial industries. On a
combined basis, the company expects to have increased capacity for
loan growth while maintaining its current risk thresholds.
Complementary values and community focus: Both
organizations share a legacy of developing deep community ties,
along with core values centered on customer service,
accountability, and adaptability to market changes. The combined
organization will have a stronger, deeper leadership team with
complementary expertise to drive enhanced operational performance,
strategic growth, and risk management. In addition, the combined
bank will continue to provide philanthropic, civic, and economic
development support to the communities in which it operates.
Financial Benefits of the
Merger
The transaction is projected to deliver 17% EPS accretion to
Chemical and 31% EPS accretion to TCF by 2020, with a tangible book
value earn-back period of 2.7 years. Pro forma merged company
financial metrics are based on each company’s stand-alone consensus
median analyst estimates, estimated combined company cost
synergies, anticipated purchase accounting adjustments, and the
expected merger closing time-frame. 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,
including:
- Return on Average Tangible Common
Equity of approximately 19%
- Return on Average Assets of
approximately 1.6%, and
- Efficiency ratio of approximately
53%.
In addition, the transaction is expected to generate
approximately $180 million in annual run-rate cost synergies by
2020, with minimal reductions in branches.
Transaction Details
Under the terms of the agreement, TCF shareholders will receive
0.5081 shares of Chemical 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 January 25, 2019. Each
outstanding share of 5.70% Series C Non-Cumulative Perpetual
Preferred Stock of TCF 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 and Chemical shareholders will own
54% and 46% of the combined company, respectively, on a fully
diluted basis.
Governance and
Leadership
The combined company will be headquartered in Detroit and
maintain a significant operating presence in Minneapolis as well as
Midland and Chicago. The combined company will be led by:
- Gary Torgow, who will serve as
executive chairman of the board of directors;
- Vance Opperman, who is the current lead
independent director of TCF Financial Corporation’s board of
directors, will serve as lead independent director;
- Craig Dahl, who will serve as CEO and
president;
- Dennis Klaeser, who will serve as
CFO;
- Brian Maass, who will serve as deputy
CFO and treasurer; and
David Provost will become chairman of the combined bank and Tom
Shafer will become president and COO of the combined bank.
Additional leadership team members will be comprised of highly
experienced and proven executives who reflect the strengths and
capabilities of both banks and will share equally in the
integration process.
The combined company’s board of directors will have sixteen
directors, consisting of eight directors from TCF and eight
directors from Chemical.
Timing and Approvals
The merger is expected to close in the late third or early
fourth quarter of 2019, subject to satisfaction of customary
closing conditions, including receipt of customary regulatory
approvals and approval by the shareholders of each company.
Advisors
Keefe, Bruyette & Woods is acting as financial advisor to,
and rendered a fairness opinion to the board of directors of,
Chemical. Nelson Mullins Riley & Scarborough, LLP and Wachtell,
Lipton, Rosen & Katz are serving as legal counsel to Chemical.
J.P. Morgan Securities LLC is acting as lead financial advisor to,
and rendered a fairness opinion to the board of directors of, TCF.
Perkins Advisors, LLC is also acting as financial advisor to TCF,
and Simpson Thacher & Bartlett LLP is serving as legal
counsel.
Joint Conference Call and Webcast
Details
Chemical and TCF will conduct a live conference call and webcast
to discuss the transaction at 10 am Eastern Time today. To listen
to the live call, please dial 888-378-4398 and enter 575396 for the
conference ID. The webcast, along with related slides, will be
available on both the Chemical website (www.chemicalbank.com) and
the TCF website (ir.tcfbank.com), as well as through the joint
transaction website, www.PremierMidwestBank.com. A replay of the
conference call will be available via the websites listed
above.
As a result of today’s merger announcement, both companies have
cancelled their previously scheduled 2018 fourth quarter earnings
conference calls.
About Chemical Financial Corporation
Chemical Financial Corporation is the largest banking company
headquartered and operating branch offices in Michigan. Chemical
operates through its subsidiary bank, Chemical Bank, with 212
banking offices located primarily in Michigan, northeast Ohio and
northern Indiana. As of December 31, 2018, Chemical had total
consolidated assets of $21.5 billion. Chemical Financial
Corporation's common stock trades on The NASDAQ Stock Market under
the symbol CHFC and is one of the issuers comprising The NASDAQ
Global Select Market and the S&P MidCap 400 Index. More
information about Chemical Financial Corporation is available by
visiting the "Investor Information" section of its website at
www.chemicalbank.com.
About TCF Financial Corporation
TCF is a Wayzata, Minnesota-based national bank holding company.
As of December 31, 2018, TCF had $23.7 billion in total assets and
314 bank branches in Illinois, Minnesota, Michigan, Colorado,
Wisconsin, Arizona and South Dakota providing retail and commercial
banking services. TCF, through its subsidiaries, also conducts
commercial leasing and equipment finance business in all 50 states
and commercial inventory finance business in all 50 states and
Canada. For more information about TCF, please visit
http://ir.tcfbank.com.
Cautionary Note Regarding Forward-Looking Statements
Statements included in this press release which are not
historical in nature are intended to be, and hereby are identified
as, forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Examples of
forward-looking statements include, but are not limited to,
statements regarding the outlook and expectations of Chemical and
TCF with respect to their planned merger, the strategic benefits
and financial benefits of the merger, including the expected impact
of the transaction on the combined company’s future financial
performance (including anticipated accretion to earnings per share,
the tangible book value earn-back period and other operating and
return metrics), and the timing of the closing of the transaction.
Words such as “may,” “anticipate,” “plan,” “estimate,” “expect,”
“project,” “assume,” “approximately,” “continue,” “should,”
“could,” “will,” “poised,” and variations of such words and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements are subject to risks,
uncertainties and assumptions that are difficult to predict with
regard to timing, extent, likelihood and degree of occurrence,
which could cause actual results to differ materially from
anticipated results. Such risks, uncertainties and assumptions,
include, among others, the following:
- the failure to obtain necessary
regulatory approvals when expected or at all (and the risk that
such approvals may result in the imposition of conditions that
could adversely affect the combined company or the expected
benefits of the transaction);
- the failure of either Chemical or TCF
to obtain shareholder approval, or to satisfy any of the other
closing conditions to the transaction on a timely basis or at
all;
- the occurrence of any event, change or
other circumstances that could give rise to the right of one or
both of the parties to terminate the merger agreement;
- the possibility that the anticipated
benefits of the transaction, including anticipated cost savings and
strategic gains, are not realized when expected or at all,
including as a result of the impact of, or problems arising from,
the integration of the two companies or as a result of the strength
of the economy, competitive factors in the areas where Chemical and
TCF do business, or as a result of other unexpected factors or
events;
- the impact of purchase accounting with
respect to the transaction, or any change in the assumptions used
regarding the assets purchased and liabilities assumed to determine
their fair value;
- diversion of management’s attention
from ongoing business operations and opportunities;
- potential adverse reactions or changes
to business or employee relationships, including those resulting
from the announcement or completion of the transaction;
- the ability of either company to
effectuate share repurchases and the prices at which such
repurchases may be effectuated;
- the outcome of any legal proceedings
that may be instituted against Chemical or TCF;
- the integration of the businesses and
operations of Chemical and TCF, which may take longer than
anticipated or be more costly than anticipated or have
unanticipated adverse results relating to Chemical’s or TCF’s
existing businesses;
- business disruptions following the
merger; and
- other factors that may affect future
results of Chemical and TCF including changes in asset quality and
credit risk; the inability to sustain revenue and earnings growth;
changes in interest rates and capital markets; inflation; customer
borrowing, repayment, investment and deposit practices; the impact,
extent and timing of technological changes; capital management
activities; and other actions of the Federal Reserve Board and
legislative and regulatory actions and reforms.
Additional factors that could cause results to differ materially
from those described above can be found in the risk factors
described in Item 1A of each of Chemical’s and TCF’s Annual Report
on Form 10-K filed with the SEC for the year ended December 31,
2017. Annualized, pro forma, projected and estimated numbers are
used for illustrative purpose only, are not forecasts and may not
reflect actual results. Chemical and TCF disclaim any obligation to
update or revise any forward-looking statements contained in this
press release, which speak only as of the date hereof, whether as a
result of new information, future events or otherwise, except as
required by law.
Important Additional Information and Where to Find It
This communication is being made in respect of the proposed
merger transaction between Chemical and TCF. In connection with the
proposed merger, Chemical will file with the SEC a Registration
Statement on Form S-4 that will include the Joint Proxy Statement
of Chemical and TCF and a Prospectus of Chemical, as well as other
relevant documents regarding the proposed transaction. A definitive
Joint Proxy Statement/Prospectus will also be sent to Chemical and
TCF shareholders. INVESTORS ARE URGED TO READ THE REGISTRATION
STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE
MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS
FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
A free copy of the Joint Proxy Statement/Prospectus, once
available, as well as other filings containing information about
Chemical and TCF, may be obtained at the SEC’s Internet site
(http://www.sec.gov). You will also be able to obtain these
documents, free of charge, from Chemical by accessing Chemical’s
website at http://www.chemicalbank.com (which website is not
incorporated herein by reference) or from TCF by accessing TCF’s
website at http://www.tcfbank.com (which website is not
incorporated herein by reference). Copies of the Joint Proxy
Statement/Prospectus once available can also be obtained, free of
charge, by directing a request to Chemical Investor Relations at
Investor Relations, Chemical Financial Corporation, 333 W. Fort
Street, Suite 1800, Detroit, MI 48226, by calling (800) 867-9757 or
by sending an e-mail to investorinformation@ChemicalBank.com, or to
TCF Investor Relations at Investor Relations, TCF Financial
Corporation, 200 Lake Street East, EXO-02C, Wayzata, MN 55391 by
calling (952) 745-2760 or by sending an e-mail to
investor@tcfbank.com.
Participants in Solicitation
Chemical and TCF and certain of their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from Chemical and TCF shareholders in
respect of the transaction described in the Joint Proxy
Statement/Prospectus. Information regarding Chemical’s directors
and executive officers is contained in Chemical’s Annual Report on
Form 10-K for the year ended December 31, 2017, its Proxy Statement
on Schedule 14A, dated March 16, 2018, and certain of its Current
Reports on Form 8-K, which are filed with the SEC. Information
regarding TCF’s directors and executive officers is contained in
TCF’s Annual Report on Form 10-K for the year ended December 31,
2017, its Proxy Statement on Schedule 14A, dated March 14, 2018,
and certain of its Current Reports on Form 8-K, which are filed
with the SEC. Additional information regarding the interests of
those participants and other persons who may be deemed participants
in the transaction may be obtained by reading the Joint Proxy
Statement/Prospectus regarding the proposed merger when it becomes
available. Free copies of this document may be obtained as
described in the preceding paragraph.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190128005272/en/
TCF Financial CorporationInvestor Relations:Tim Sedabres,
(952) 745-2766investor@tcfbank.comorMedia:Mark Goldman, (952)
475-7050news@tcfbank.com
Chemical Financial CorporationInvestor Relations:Dennis
Klaeser, (248)
498-2848investorinformation@ChemicalBank.comorMedia:Tom Wennerberg,
(248) 498-2872Tom.Wennerberg@ChemicalBank.com
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