Old National Bancorp in Evansville, Ind., has agreed to buy First Midwest Bancorp in Chicago.
The $23.7 billion-asset Old National said in a press release Tuesday that it will pay $2.5 billion in stock for the $21 billion-asset First Midwest. The deal, which is expected to close by early 2022, priced First Midwest at 165% of its tangible book value.
First Midwest shareholders will own about 44% of Old National’s stock. The company will have dual headquarters in Evansville and Chicago, $29.1 billion of loans and $34.5 billion of deposits.
Jim Ryan, Old National’s chairman and CEO, will remain CEO. Michael Scudder, First Midwest’s chairman and CEO, will become Old National’s executive chairman.
“First Midwest and Old National are two relationship-focused financial institutions that have rich histories, extremely compatible cultures and a shared commitment to helping our clients achieve financial success,” Scudder said in the release.
“As a combined organization, we will be in an even stronger position to invest, grow and innovate in talent, capabilities and services that will enhance an already superior client experience and further set us apart as a market leader not only in Chicago but across the Midwest,” Scudder added.
“We have covered [each company] for a number of years and they both have been active buyers of smaller Midwestern banks,” John Rodis, an analyst at Janney Montgomery Scott, wrote in a note to clients.
“This transaction is bigger than we expected but is also a sign of the times in today’s operating environment and the need for scale,” Rodis added.