NEW YORK (CNNfn) - Old Kent Financial Corp., continuing a recent acquisition streak, agreed Friday to acquire Merchants Bancorp Inc., a bank holding company based in Aurora, Ill., for stock valued at about $189 million.
Under the deal, which will boost Grand Rapids, Mich.-based Old Kent's presence in the Chicago area, Merchants Bancorp shareholders will receive 4.5 million shares of Old Kent stock. The deal is based on an exchange ratio of 0.830 Old Kent share for each Merchants share, or $35.12 per share based on Old Kent's closing price of 42-5/16 Thursday.
Shares of Merchants Bancorp (MBIA) gained ¼ to 32-1/2 in early Friday trading, while Old Kent slipped 13/16 to 41-1/2.
The combined bank would have a market capitalization of about $5.4 billion. Shareholders and regulators must approve the deal, which the companies hope to conclude in early 2000.
Old Kent expects annual cost savings of $9 million, before tax, as a result of the merger. The bank, which operates 246 branch offices in the Midwest as well as 167 mortgage lending sites throughout the country, had total assets of about $17 billion as of July 14.
Merchants Bancorp had assets of $921 million and deposits of $778 million as of June 30.
"Healthy, growing markets have always been a key to Old Kent's success, and Merchants Bancorp is located in one of the most desirable and fast growing counties in Illinois," Old Kent CEO David J. Wagner said.
Two weeks ago, Old Kent completed its acquisition of CFSB Bancorp Inc. of Lansing, Mich. Another pending acquisition, Pinnacle Banc Group Inc., should close in September, Old Kent said.