Old National Bank, First Midwest Agree to $6.5B Merger Deal

by John Nelson

EVANSVILLE, IND. AND CHICAGO — Old National Bancorp (Nasdaq: ONB) and First Midwest Bancorp Inc. (Nasdaq: FMBI) have entered into a definitive merger agreement valued at $6.5 billion. The two Midwest institutions operate retail bank branches under the Old National Bank and First Midwest Bank brands, respectively.

The all-stock transaction is expected to close late this year or early 2022 and is subject to customary closing conditions, including regulatory and shareholder approvals. The boards of directors of both companies have unanimously approved the merger agreement.

The “merger of equals” arrangement will allow the banks to compete against other banks and lenders in the Midwest for new business, as well as give both organizations the ability to scale and retain their existing personnel and client base. The combined company will be the sixth-largest bank with headquarters in the Midwest.

First Midwest Bancorp operates 103 First Midwest Bank branches, primarily in metropolitan Chicago. (Photo courtesy of LoopNet Inc.)

The transaction calls for First Midwest stockholders to receive 1.1336 shares of Old National common stock for each share of First Midwest common stock they own. Following completion of the transaction, former First Midwest stockholders are expected to collectively represent approximately 44 percent of the combined company. This values First Midwest currently at $2.5 billion, according to Market Watch.

The combined assets of the new organization, which will operate under the Old National Bancorp and Old National Bank monikers upon completion of the merger, totals $45 billion. The combined company will have dual headquarters in Evansville and Chicago.

Old National’s retail footprint totaled 162 banking centers as of year-end 2020, including branches in Indiana, Illinois, Kentucky, Michigan, Minnesota and Wisconsin. First Midwest Bancorp operates 103 First Midwest Bank branches primarily in metropolitan Chicago, as well as southeast Wisconsin, northwest Indiana, central and western Illinois and eastern Iowa. Old National and First Midwest have limited area service overlap so the two companies don’t anticipate much consolidation of retail locations.

Jim Ryan, chairman and CEO of Old National Bancorp, will maintain his role as CEO of the combined company. Michael Scudder, chairman and CEO of First Midwest Bancorp, will serve as the executive chairman of the new organization.

“We are confident that the powerful synergies, additional market coverage and financial strength this partnership creates will drive long-term shareholder value, and we are excited about combining the outstanding legacies of two strong, client- and community-focused organizations,” says Ryan.

Keefe, Bruyette & Woods, A Stifel Company, served as exclusive financial advisor to Old National Bancorp, and Squire Patton Boggs US LLP acted as the bank’s legal advisor.

J.P. Morgan Securities LLC served as exclusive financial advisor to First Midwest Bancorp, and Sullivan & Cromwell LLP acted as its legal advisor in the merger transaction.

The stock price for First Midwest closed on Friday, May 28 at $20.93 per share, up from $13.08 a year ago. Old National’s stock price closed Friday at $19.05, up from $13.61 a year ago.

— John Nelson

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