Old Kent buys Pinnacle
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March 19, 1999: 2:31 p.m. ET
Michigan-based bank to pay $243M in stock to expand in Chicago area
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NEW YORK (CNNfn) - Old Kent Financial Corp. said Friday it plans to buy Illinois-based Pinnacle Banc Group Inc. in a $243 million deal aimed at strengthening Old Kent's presence in the Chicago area.
The stock swap transaction, in which Pinnacle holders would receive 0.717 Old Kent share for each Pinnacle share outstanding, places Pinnacle's value at $32.27 a share based on Thursday's $45 closing price for Old Kent.
That value was decreased somewhat on Friday when Old Kent stock tumbled 1-1/16 to 43-15/16 in afternoon trading. Pinnacle, which closed Thursday at 27-3/16, was up 3-1/16 to 30-1/4 in Friday afternoon trading.
Old Kent said it expects to take about $16 million in one-time charges during the third quarter of 1999 as a result of the merger, and should save about $9 million annually after the acquisition is completed. The new company will have an estimated market capitalization of $5 billion.
"Pinnacle Banc Group will further expand and strengthen our Chicago area franchise, moving Old Kent to fifth in deposit share in that market," said David J. Wagner, chairman and CEO of Grand Rapids, Mich.-based Old Kent.
Old Kent said Friday it was too soon to tell if any branches would be closed or jobs would be cut as a result of the merger.
Pinnacle shareholders and regulators must approve the deal. Old Kent said it plans to distribute 5.4 million shares of its stock to Pinnacle shareholders.
In February, Old Kent announced plans to acquire another Michigan-based bank, CFSB Bancorp. (CFSB), for about $242 million in stock. Old Kent said this deal and the Pinnacle merger are both expected to be completed in the third quarter of this year.
Old Kent (OK), operates 235 banking offices in Michigan, Illinois and Indiana and more than 140 mortgage lending sites throughout the country. It had assets of $16.6 billion at the end of 1998.
Pinnacle (PINN), a bank holding company based in Oak Brook, Illinois, has subsidiaries in 16 locations, including 13 branches in the Chicago metropolitan area. Its assets totaled $1.1 billion at the end of 1998.
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Old Kent Bank
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