Fifth Third to buy Chicago’s MB Financial

Cincinnati-based Fifth Third Bancorp announced May 21 it will buy MB Financial Inc., Chicago, in a stock-and-cash deal valued at approximately $4.7 billion.

MB Financial shareholders will receive $54.20 of value per share, comprised of 1.45 shares of Fifth Third common stock and $5.54 in cash, a 24 percent premium to the May 18 closing price of MB Financial stock, representing according to reports, 2.67 times MB Financial’s tangible book value.

Fifth Third Bank operates 1,300 branches throughout its 12-state geographic footprint. According to Reuters, the bank said the deal is expected to reduce its regulatory common equity Tier 1 ratio by about 45 basis points.

Fifth Third also announced cost-cutting measures once the deal is complete, according to news reports, targeting $225 million in savings. Expected cuts could result in the closure of 50 branches and the elimination of jobs that aren’t “client-facing.”

The deal will place Fifth Third in fourth place among banks serving the Chicago market, when ranked by deposits.

MB Financial CEO Mitch Feiger will become chairman and CEO of Fifth Third Chicago. Two MB Financial directors will join Fifth Third’s board.

Citi served as financial adviser and Simpson Thacher & Bartlett LLP served as legal adviser to Fifth Third, while Sandler O’Neill + Partners served as financial adviser and Silver Freedman, Taff & Tiernan LLP and Vedder Price were legal counsel to MB Financial.