Bank Leumi (TASE:LUMI) last night signed an agreement to merge Bank Leumi USA with Valley National Bancorp (Nasdaq: VLY) at a valuation of $1.2 billion, representing 140% of current equity. After the merger, Bank Leumi will record after tax profit of NIS 650-750 million.
Leumi said that after the merger, it will retain a 14% stake in the merged bank and will be the largest shareholder but not the controlling shareholder. Valley will pay for 90% of the deal in shares of the merged bank and the other 10% in cash. The merged bank will become the 29th largest publicly traded bank on the US stock exchange and will be in a position to grow its business operations in a range of strategic areas including areas in which Leumi USA is involved such as technology, venture capital, real estate development, and private banking. Leumi USA operates in New York, Chicago, Florida and California.
As part of the deal, Leumi will appoint two directors to the board of the merged bank and Leumi USA CEO Avner Mendelson will serve as deputy chairman of the merged bank.
Bank Leumi CEO Hanan Friedman said, “For Leumi, this is a strategic move designed to deepen and expand our exposure to the U.S. The merger will provide Leumi significant and unprecedented presence and market access for an Israeli bank in the U.S. This is positive news for our commercial and technology customers, who will enjoy a wider range of product offerings and the capabilities of a top and prosperous U.S. bank. Valley’s strong and experienced team which is headed by Chairman, President and CEO Ira Robbins, will benefit from the addition of Leumi USA team members. This ensures an ongoing commitment to Israeli customers and Leumi USA employees, who will enjoy the benefits of working with a top bank with an impressive growth trajectory.”
Mendelson said, “After years of transformation, and significant growth establishing Bank Leumi USA as a top middle market bank, this merger is a natural step and strategic milestone in our growth journey. In Valley, we have found an unparalleled cultural and strategic partner with a shared client focus and commitment to building lasting relationships. Our high-caliber talent, impressive regional presence, and business lines will become growth engines for Valley’s commercial business and support Valley’s growth vision. I am excited and energized by the opportunities this merger brings for our bank’s clients and employees.”
Valley chairman, president and CEO Ira Robbins said, “We are extremely excited about the combination with Bank Leumi and the diverse growth opportunities that we expect the partnership will bring. Bank Leumi’s unique deposit verticals, including the technology and venture capital business, will continue the significant funding improvement that we have driven over the last few years. On the lending side, Bank Leumi will add diversification into niche C&I segments and new geographies including in California and Illinois. We are also eager to scale Bank Leumi’s private banking platform across Valley’s larger customer base and footprint. Leveraging these new and distinct platforms and skillsets will represent the next exciting phase of our evolution as a premier full-service commercial bank.” (GLOBES)