United Bankshares To Acquire Cardinal Financial For $912M

Last week, United Bankshares, Inc. (NASDAQ:UBSI) announced a merger deal with Cardinal Financial Corporation (NASDAQ:CFNL) . The deal, signifying the 31st acquisition for United Bankshares, is valued at approximately $912 million.

This agreement solidifies United Bankshares’ consistent history of successful M&A transactions and positions it as the largest community bank in the Metro D.C. region. The deal term is subject to changes by United Bankshares, any time prior to the closing of the deal, based on conditions mentioned in the agreement.

Stock Deal to Close by Mid-2017

United Bankshares will exchange 0.71 shares of its share for each outstanding share of Cardinal Financial (100% stock consideration). The deal consideration is based on Cardinal Financial’s shares outstanding of 32.5 million and options outstanding of 1.02 million. Notably, the agreement price represents 2.24 times Cardinal Financial’s tangible book value as of Jun 30, 2016.

The completion of the collaboration is subject to customary regulatory approval as well as the approval of United Bankshares and Cardinal Financial shareholder. The transaction, unanimously approved by Board of Directors of both the companies, is expected to close by mid 2017.

Richard M. Adams – Chairman and CEO of United Bankshares stated, “This merger aligns perfectly with our long-standing commitment to growth in the D.C. Metro area.”

Bernard H. Clineburg – Executive Chairman of Cardinal Financial stated, “We are pleased Cardinal found a like-minded partner to further our growth in Northern Virginia, the District of Columbia and Maryland. United brings to the table the capacity to meet the sophisticated needs of our customers, while at the same time staying true to our commitment to the communities we serve. In addition, the transaction will add tremendous value for our shareholders."

Earnings Accretion of About 3%

United Bankshares is projected to have total assets of approximately $20 billion, with market capitalization of $3.9 billion, based on its closing price on Aug 16, 2016. Further, the company projects earnings accretion of about 3% in full first year, following the closure. Also, cost savings are expected to be 25% (based on Cardinal Financial’s non-interest expense). Notably, the accretion to tangible book value is assumed to be immediate, with no enhancement in revenue.

Further, Cardinal Financial’s Executive Chairman, Mr. Clineburg is predicted to join United Bankshares’s Board of Directors.

United Bankshares is well-capitalized, based upon regulatory norms. Its earnings and asset quality continue to remain strong despite the recent merger-related expenses. In Jun, 2016, United completed its 30th acquisition of Bank of Georgetown – a privately-held community bank headquartered in Washington, D.C.

Currently, United Bankshares, Inc. holds a Zacks rank #5 (Strong Sell), while Cardinal Financial Corporation holds a Zacks rank #3 (Hold). Some better-ranked banking stocks include Hancock Holding Company (NASDAQ:HBHC) and Republic Bancorp Inc. (NASDAQ:RBCAA) , both sporting a Zacks rank #1 (Strong Buy).


UTD BANKSHARES (UBSI): Free Stock Analysis Report

HANCOCK HLDG CO (HBHC): Free Stock Analysis Report

CARDINAL FINL (CFNL): Free Stock Analysis Report

REPUBLIC BCP KY (RBCAA): Free Stock Analysis Report

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