NEW YORK — CIT Group Inc. (NYSE: CIT), a provider of commercial lending and leasing services, will merge with IMB Holdco LLC, the parent company of OneWest Bank N.A., for $3.4 billion in cash and stock.
The merger will increase CIT’s total assets to $67 billion. Following the close of the transaction, CIT Bank, CIT’s banking subsidiary, will merge with OneWest Bank under the CIT Bank name and CIT.
Under the terms of the agreement, IMB Holdco LLC shareholders will receive $2 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 subject to customary closing conditions and regulatory approvals.
CIT expects the transaction to be 20 percent accretive to earnings per share in 2016, generating an internal rate of return of 15 percent.
John Thain, chairman and CEO of CIT Group, will continue to lead the company. Steven 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.
“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,” says Mnuchin. “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.”
For his part, Thain of CIT says the 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.
“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 utilization of our net operating losses, 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,” says Thain.
J.P. 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 are representing IMB Holdco LLC. Sullivan & Cromwell is serving as joint regulatory counsel for CIT and IMB Holdco LLC.
OneWest Bank is a privately owned regional bank formed in 2009 that operates 73 retail branches in Southern California, with approximately $23 billion in assets, including commercial and residential mortgage loans and $15 billion in deposits.
With approximately $35 billion in financing and leasing assets, financial holding company CIT provides financing, leasing and advisory services to its clients and their customers across more than 30 industries. The New York-based company was founded in 1908.
CIT’s stock price closed Tuesday, July 22, at $48.71 per share, down from $50.11 per share a year ago.
— Danielle Everson