Regions Financial Corp said Thursday it agreed to acquire rival Alabama-based bank AmSouth Bancorp for nearly $10 billion, pricing the deal at a discount to AmSouth’s closing share price.
Billed as a merger between two Birmingham, Alabama, banks sharing the same ZIP code, the transaction would create a top 10 U.S. bank that can better compete against bigger rivals.
AmSouth shareholders will get 0.7974 share of Regions for each AmSouth share, or $28.33 a share based on Regions’s Wednesday closing price. That is nearly a 2 percent below AmSouth’s Wednesday closing share price of $28.90.
The combined bank, which will retain the Regions name, will have a market value of about $26 billion, $140 billion in assets and 2,000 branches in 16 U.S. southeast states from Texas to Florida.
Though Regions is the bigger bank and the buyer, its chief executive, Jackson Moore, will become chairman of the combined company. The CEO job will go to AmSouth CEO C. Dowd Ritter. Jackson suffered a stroke last year and has since recovered.
Regions said it expects the deal will boost per-share earnings for shareholders of both banks. Regions said it can extract $400 million in cost savings, or about 10 percent of the combined bank’s expenses.
The bank also said it expects to incur restructuring costs of about $700 million.
The deal is the latest move by Regions to expand its presence in the southeast United States. In July 2004, Regions acquired Union Planters Corp. in a nearly $6 billion transaction.
