Synovus Financial (SNV) To Acquire Entaire To Fuel Growth

Synovus Financial Corporation (NYSE:SNV) announced signing of a definitive agreement to acquire Atlanta-based specialty financial services company, Entaire Global Companies, Inc. This acquisition is the company’s first since 2013 and is expected to close in the beginning of the fourth quarter of 2016. Also, the deal is still subject to customary closing conditions and receipt of Entaire’s stockholders’ approval.

Terms of the Agreement

Synovus Financial will carry out the acquisition through an upfront payment of $30 million in cash and stock along with additional payments to Entaire’s shareholders over the next three to five years, based on Entaire’s earnings.

Entaire’s key management personnel have also signed long-term employment agreements with Synovus Financial.

Acquisition to be Accretive to Earnings

Notably, the acquisition will lead to immediate accretion to Synovus Financial’s earnings per share, return on equity and return on assets (excluding merger-related costs which are to be recorded in the fourth quarter 2016), along with minimal dilution of its tangible book value per share.

The acquisition will add a nation-wide specialty team, with significant industry experience and a business that has an attractive risk-return profile. Further, the deal is expected enhance Synovus Financial’s balance sheet strength and diversify its loan portfolio.

Additionally, the transaction will provide an opportunity to deploy capital into a growing market segment without impacting Synovus Financial’s existing capital plan, which was announced in Oct 2015.

Moreover, Synovus Financial expects that the deal will provide solid growth potential and the combination of two similar cultures will limit risks and support smooth transition.

Currently, Synovus Financial carries a Zacks Rank #3 (Hold).

Other Stocks That Warrant a Look

Some better-ranked Southeast bank stocks include State Bank Financial Corporation (NASDAQ:STBZ) , Southern National Bancorp of Virginia Inc. (NASDAQ:SONA) and Hancock Holding Company (NASDAQ:HBHC) , each sporting a Zacks Rank #1 (Strong Buy).