CIT to acquire OneWest Bank for $3.4 billion
22 July 2014
CIT Group Inc, a leading US provider of lease finance, today announced plans to acquire California-based IMB Holdco LLC, the parent company of OneWest Bank NA, for $3.4 billion in a cash and stock deal.
Privately-owned OneWest Bank operates 73 retail branches in Southern California, and has approximately $23 billion in assets, including commercial and residential mortgage loans, and $15 billion in deposits.
Following the close of the transaction, CIT Bank, CIT's banking subsidiary, will merge with OneWest Bank under the CIT Bank and CIT will have assets of $67 billion and $28 billion in deposits.
CIT expects the transaction to be 20 per cent accretive to its earnings in 2016, generating an internal rate of return (IRR) of 15 per cent.
The merged CIT Group Inc will continue to be led by John A Thain, chairman and chief executive Officer.
Following the close of the transaction, Steven T Mnuchin, chairman of IMB Holdco LLC, will join CIT Group Inc as vice chairman and will also become a member of its board of directors.
Alan Frank, an independent director from OneWest Bank will also join the CIT board, increasing its size from 13 to 15 members.
''This transformational transaction will combine CIT's national middle market lending platform with OneWest's wholesale lending and branch banking franchise to create a unique provider of retail and institutional financial services,'' said Thain.
''The transaction diversifies and lowers the cost of CIT's deposits, broadens the products we can offer to our middle market clients, is accretive to earnings and return on equity, and accelerates the utilisation of our NOL, while maintaining a strong capital position. We look forward to welcoming OneWest Bank's talented employees to CIT as we build our franchise and meet the financing needs of our customers.''
Mnuchin said, ''We have spent the last five years building OneWest Bank into a premier regional bank in Southern California. We are confident that this transaction will provide our retail and commercial customers with access to the broad range of high-quality financial products and services offered by CIT, and allow OneWest to benefit from CIT's expansive client base and global reach. I look forward to joining the CIT board, and to ensuring a smooth integration of CIT Bank and OneWest for the benefit of both companies' stakeholders.''
Under the terms of the agreement, IMB Holdco LLC shareholders will receive $2.0 billion in cash and 31.3 million shares of CIT Group Inc common stock currently valued at $1.4 billion assuming a CIT stock price of $44.33.
The boards of directors of both companies have approved the transaction, which is now subject to customary closing conditions and regulatory approvals.
JP Morgan Securities LLC is serving as financial advisor to CIT, and Wachtell, Lipton, Rosen & Katz is serving as CIT's legal counsel. Goldman, Sachs & Co, Bank of America Merrill Lynch and Cleary, Gottlieb, Steen & Hamilton LLP represent IMB Holdco LLC.
Sullivan & Cromwell is serving as joint regulatory counsel for CIT and IMB Holdco LLC.
OneWest Bank is a Southern California bank, focused on delivering personalized, relationship-based banking to its customers. The bank has 73 retail branches conveniently located throughout Southern California to serve consumers and businesses, small and large.
With total assets of $23 billion, OneWest has the size and strength to offer a wide array of banking products and services and the stability to protect its depositors. OneWest is an FDIC-insured institution and funds deposited in the bank are insured up to the FDIC's insurance limit of $250,000 per depositor.