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First Horizon to acquire Capital Bank for $2.2bn

BBR Staff Writer Published 05 May 2017

First Horizon National has agreed to acquire Capital Bank Financial in a deal worth about $2.2bn to strengthen its presence in the US southeast market.

The merger is expected to speed up First Horizon's plan to expand its footprint in the rapidly growing markets in the Southeast.    

Post merger, the combined organization will have $40bn in assets alongside $32bn in deposits and $27bn in loans.

It will have more than 300 branches across the US states of Tennessee, North and South Carolinas, Georgia, Florida, Mississippi, Virginia and Texas. 

First Horizon chairman and CEO Bryan Jordan said: “Together with the accomplished team at Capital Bank we will be able to leverage the strengths of both banks and capitalize on growth opportunities in attractive, high-growth Southeast markets and enhance our strong presence in our Tennessee markets.

“This partnership will help us more quickly achieve our critical bonefish financial targets. We look forward to working with the talented people of Capital Bank to combine the best of both of our organizations.”

As per the merger agreement, First Horizon will retain its 153-year-old First Tennessee bank brand in Tennessee while branches outside the state will use the Capital Bank brand.

Based on the election allocation and proration provisions of the merger agreement, each of the Capital Bank common stock holders will receive cash or stock equivalent to 1.750 First Horizon shares alongside $7.90 in cash for each Capital Bank share held.

In total, Capital Bank stakeholders will get a mix of nearly 80% stock and 20% cash from First Horizon. Upon closing of the transaction, the shareholders of Capital Bank shareholders, all put together will own nearly 29% of the common shares of First Horizon besides receiving about $411m in cash.

Two members of Capital Bank’s board of directors including the company chairman and CEO Gene Taylor will join the First Horizon board.

Taylor, who will become vice chairman of First Horizon post merger, said: “The merger with First Horizon will allow us to sustain the success Capital Bank has achieved and create new opportunities for growth. 

“The strategic fit between the two organizations is compelling, especially for our valued customers who will benefit from the enhanced balance sheet strength and broader array of products and services offered by a $40bn Southeastern bank.”

Prior to the merger, the Memphis-headquartered First Horizon has $30bn in assets with 170 branches across Tennessee and the Southeast.

On the other hand, the Coral Gables-headquartered Capital Bank has $10bn in assets and operates 193 branches in the Carolinas, Florida, Tennessee and Virginia.

Image: First Horizon and Capital Bank agree to merge in a $2.2bn deal. Photo: courtesy of stockimages/Freedigitalphotos.net.