Hancock Holding Co. agreed to buy Whitney Holding Corp., the New Orleans-based bank that lends to the oil and gas industries, in a stock swap initially valued at $1.5 billion to expand in the U.S. South.
The offer for Whitney is worth $15.48 a share, 42 percent more than yesterday’s closing price, Gulfport, Mississippi-based Hancock said today in a statement. Investors will get 0.418 Hancock share for each Whitney’s, according to terms of the exchange.
Hancock is expanding in states including Louisiana, Mississippi and Texas after bailed-out Whitney sold nonperforming loans and was hurt by the Gulf Oil spill. The combined institution will have about $20 billion in assets and 305 branches. Five Whitney directors will join the Hancock board at the completion of the purchase, which is expected in the second quarter of 2011.
“It’s beginning of the wave of consolidation that’s expected in this industry,” said Richard Bove, the analyst at Rochdale Securities LLC in Lutz, Florida, who included Whitney on his list of takeover targets in September.
The price equals 103 percent of Whitney’s book value, compared with an average of 110 percent for the 445 lenders in the Nasdaq Bank Index, according to data compiled by Bloomberg. The 42 percent premium is less than the 54 percent average among U.S. regional banks in the past 12 months.
Whitney advanced $3.13, or 29 percent, to $14 at 4:30 p.m. New York time in Nasdaq Stock Market trading, bringing its gain to 54 percent this year. Hancock slid $2.46, or 6.6 percent, to $34.58. The stock is down 21 percent in 2010.
The deal combines “two similarly sized companies with complementary cultures,” Whitney Chief Executive Officer John Hope said in the statement.
Hancock plans to repurchase the $300 million of preferred shares and the warrants that were sold the U.S. by Whitney under the Troubled Asset Relief Program. Morgan Stanley advised Hancock and Wachtell, Lipton, Rosen & Katz provided legal counsel. JPMorgan Chase & Co. and Alston & Bird LLP advised Whitney.