Ohio-based bank Huntington Bancshares will significantly broaden its Midwest presence by acquiring rival Sky Financial for $3.6 billion in stock and cash. Each share of Sky is thus valued at $30.22, a 25% premium to its $24.17 close on December 19. The deal is expected to immediately add to Huntington's 2007 earnings and to result in annual savings of $115 million. The consolidation will catapult the bank ahead of competitor Keycorp as Ohio's third-largest bank, and will make Huntington the 24-largest U.S. regional bank. Regional bank consolidation is being driven by the need to shed costs as higher interest rates and waning demand for home loans diminish profits.The Huntington-Sky deal has been approved by both boards and should close in Q3 2007.
• Sources: Press Release, Bloomberg, Reuters, MSN Money
• Related commentary: Mixed Outlook for Regional Banking Sector, Tom Brown's Financial Services Picks
• Potentially impacted stocks and ETFs: Sky Financial Group Inc. (SKYF), Huntington Bancshares Inc. (HBAN) Competitors: FirstMerit Corp. (FMER), National City Corp. (NCC), Fifth Third Bancorp (FITB) ETFs: iShares Dow Jones US Regional Banks Index Fund (IAT) • iShares Dow Jones US Financial Sector Index Fund (IYF) • iShares Dow Jones US Financial Services Index Fund (IYG) • Regional Bank HOLDRs Trust (RKH) • Vanguard Financials ETF (VFH) • Select Sector SPDR Financial (XLF)
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