In a significant move within the banking sector, Renasant Corporation has announced its acquisition of The First Bancshares, Inc. in an all-stock transaction valued at approximately $1.2 billion. This merger aims to enhance Renasant's footprint across the southeastern United States, a region marked by rapid economic growth and increasing financial opportunities. Under this agreement, shareholders of The First Bancshares will receive one share of Renasant stock for every share they currently own.
This share exchange reflects a transaction value of about $37.09 per share of The First, based on Renasant's closing price last Friday. Furthermore, all options held by The First’s shareholders will be cashed out at their in-the-money value upon completion of the merger, ensuring a seamless transition for investors. Despite the promising deal, market reactions were mixed.
In premarket trading on Tuesday, shares of Renasant saw a decline of 4.7%, while shares of The First Bancshares experienced an uplift of 7.7%. This reflects investor sentiment regarding the implications of the merger and its potential impacts on both companies' futures. This strategic merger is anticipated to form a substantial six-state banking franchise with approximately $25 billion in assets, $18 billion in loans, and $21 billion in deposits.
The completion of this merger is subject to regulatory approval and the consent of the banks’ respective shareholders, with expectations for closure in the first half of the coming year. Mitch Waycaster, President and Chief Executive Officer of Renasant, stated in a joint announcement, "As with Renasant, The First has expanded into some of the most dynamic, fastest growing markets in the southeast.
Together, we will create a more valuable company with the meaningful scale necessary to thrive in today’s competitive banking environment." In financial projections, excluding one-time transaction costs, the merger is expected to be immediately accretive to Renasant’s earnings per share, emphasizing its potential financial benefits.
The First Bancshares operates 111 branches across several states, including Mississippi, Louisiana, Alabama, Florida, and Georgia. The integration is aimed at enhancing Renasant's locations, service offerings, and product lines, as noted by Kevin Chapman, Renasant’s President. However, the merger has not been without its criticisms.
Brandon King, Vice President at Truist, commented on the balance of the deal’s pricing strategy and its impact on common equity, suggesting that the acquisition at $32 a share could 'dull the financial merits of this deal' from his perspective. In a separate announcement on the same day, Renasant disclosed that it raised $200 million through an equity offering of 6.25 million shares, with the proceeds explicitly allocated for further acquisitions and strategic investments.
There is also an option for underwriters to purchase an additional 937,500 shares as part of this offering. As a result of the merger, Ray Cole, CEO of The First Bancshares, will be appointed as a senior executive vice president and will join Renasant’s board of directors along with its Renasant Bank unit.
Renasant has also launched a substantial community benefit plan, valued at $10.3 billion over five years, aimed at fostering economic growth, improving access to financial services, and promoting inclusivity across the expanded footprint of the bank..