Cadence Bank in Tupelo, Miss., has agreed to sell its insurance agency to Arthur J. Gallagher & Co.
The $48.8 billion-asset bank said in a press release that it will sell Cadence Insurance for $904 million in cash in a deal expected to close in the fourth quarter. The sale will allow Cadence to take advantage of high valuations for insurance agencies.
Cadence plans to reinvest capital into strategic transformation efforts and growing its core banking franchise. The immediate plan is to use cash proceeds to reduce wholesale borrowing.
On an after-tax basis, net cash proceeds should be $650 million while the immediate net capital increase should be roughly $620 million.
“We have always liked the insurance business,” Dan Rollins, Cadence’s chairman and CEO said in the release.
“The sale will allow us to focus on what we do best – building strong, long-lasting banking relationships, while also continuing to realize our long-term strategy,” Rollins added. “I have enjoyed working with the Cadence Insurance team immensely and have profound respect for what they do, and how well they do it.”
Morgan Stanley, MarshBerry, Ernst & Young and Hodgson Russ advised Cadence.