Old National in Evansville, Ind., has agreed to buy CapStar Financial Holdings in Nashville, Tenn.
The $49 billion-asset Old National said in a press release that it will pay $344.4 million in stock for the $3.3 billion-asset CapStar. The deal, which is expected to close in the second quarter, priced CapStar at 106% of its tangible book value.
Old National entered Tennessee last year via its high-net-worth division. It recently hired a Nashville-based commercial banking and lending team. CapStar will add 23 branches, $2.3 billion of total loans and $2.8 billion of deposits and give Old National its first operations in North Carolina.
The acquisition “is a tremendous cultural fit and a natural extension of our growth strategy,” Old National CEO Jim Ryan said in the release. “We can more fully serve our existing Nashville-area clients while also introducing our client- and community-focused brand of banking to the surrounding region.”
Old National said the deal should be about 5% accretive to its 2025 earnings per share. It should take less than two years for the company to earn back an estimated 1.8% dilution to its tangible book value.
Old National expects to incur about $40 million of merger-related expenses. The company plans to cut about 40% of CapStar’s annual noninterest expenses.
Keefe, Bruyette & Woods and Dykema Gossett advised Old National. Morgan Stanley and Wachtell, Lipton, Rosen & Katz advised CapStar.