While financial-sector merger and acquisition (M&A) deals slowed down in December 2015 from their feverish pace the month before, there were still plenty of billion-dollar-plus deals to write home about.
BBCN Bancorp, the largest Korean-American bank, solidified its top spot after agreeing to buy #2 competitor Wilshire Bancorp for $1 billion. American Homes 4 Rent positioned itself to become America’s second-largest landlord of single-family homes (just behind investment goliath Blackstone Group) after stating it would buy American Residential Properties for $1.5 billion. GE continued dismantling its GE Capital business, raising more than $20 billion in December alone as three major financial companies gobbled up various GE Capital and financial services businesses.
Of course, these are just a few of the megadeals made in the financial sector during the month. Here’s a full rundown of some of December 2015’s biggest M&A deals.
$20 Billion-Plus in Acquisitions from GE Capital Dismantling
GE first announced in April that it planned to shed most of the assets held by its finance arm, GE Capital, to return its focus to its industrial roots. Not surprisingly, some of the world’s largest financial firms happily agreed to help GE dismantle its way out of the financial business while bolstering their own financial services.
During December, the Bank of Montreal (aka BMO Financial Group) bought the GE Capital Transportation Finance lending business in the US and Canada, along with its $8.9 billion in net earning assets. The deal bolstered the commercial banker’s business with North America’s largest financier to the truck and trailer segment. The newly resulting BMO Transportation Finance would be based in Irving, Texas, and boast 11 locations in the US and four in Canada with 600-plus employees.
Also last month Capital One Financial Corp acquired GE’s US health care financial services (HFS) unit for $9 billion, which included some $8.5 billion of health care-related loans. Capital One said it would incorporate the new business into its health care banking unit to create Capital One Healthcare.
Sumitomo Mitsui Financial Group, Japan’s second-largest banking group, won its bidding war for General Electric’s leasing business in Japan, agreeing to buy it for some $4.8 billion. The deal would add some ¥500 billion in assets and 1,000 new employees to SMFG subsidiary Sumitomo Mitsui Finance and Leasing, boosting the subsidiary’s assets by more than 10% and making it Japan’s second-largest leasing company ahead of Mitsubishi UFJ Lease & Finance upon the deal’s closing (expected in April 2016).
Market-Leading Banks Boost Market Share
BBCN Bancorp, the largest Korean-American bank, agreed to buy Wilshire Bancorp (the second-largest Korean-American bank) for $1 billion in an all-stock offer. Scheduled for completion in mid-2016, the combined banks would control $12.3 billion in assets, $9.6 billion in loans, and $10 billion in deposits, effectively creating the seventh-largest bank in California and the largest Korean-American bank (and only superregional Korean-American bank), ahead of rival Hamni Financial. In addition, BBCN shareholders would own 59% of the new company, while Wilshire shareholders would own the remaining 41% after the deal closed.
Qatar National Bank (QNB) agreed to buy Finansbank, the fifth-largest privately owned bank in fast-growing Turkey and a subsidiary of the National Bank of Greece, for $2.95 billion. QNB CEO Ali Ahmed Al-Kuwari called the deal “a significant milestone in QNB’s vision to becoming a Middle East and African icon by 2017 and a leading global bank by 2030.”
Top Virginia and North Carolina community bank TowneBank agreed to buy Virginia-based Monarch Financial Holdings along with its various financial subsidiaries and 10 Monarch Bank branches in Chesapeake, Norfolk, Virginia Beach, and Williamsburg, Virginia. The deal would also add roughly $1.1 billion in assets, boosting $6.2 billion TowneBank’s total asset base by 18%, and give TowneBank the largest deposit market share (20.64%) in the Hampton Roads market.
First Busey Corporation would expand into Missouri for the first time after it agreed to buy Pulaski Financial Corporation — along with its $1.5 billion in assets (including $1.3 billion in loans, $1.1 billion in deposits) and 13 Pulaski Bank branches in the St. Louis metro area — for around $210.7 million.
Great Western Bancorp expanded its branch presence in the North Dakota and Minnesota markets after it agreed to buy HF Financial and its Home Federal bank branches for $139.5 million. The deal, which was expected to generate mid-single-digit earnings per share accretion in the first year, would also add new branches to its existing network in South Dakota and support Great Western’s organic growth opportunities in the Midwest.
Global Payments, Stifel, and Intercontinental Exchange Bolster Market Share and Tech
Global Payments agreed to pony up $4.3 billion for fellow payment processor Heartland Payment Systems, which focuses on serving small and midsized businesses. The deal is expected to boost Global Payments’ market share and customer base to some 2.5 million customers while enhancing its earnings before interest, tax, depreciation, and amortization to $1 billion.
Stifel Financial Corp. purchased Barclays’ Wealth and Investment Management Americas franchise in the US, along with its 180 financial advisors managing some $56 billion in total client assets.
US-based exchange operator Intercontinental Exchange bought the UK’s electronic trading platform developer Trayport for $650 million, expanding the exchange operator’s over-the-counter energy markets service offerings.
American Homes 4 Rent to Become US’s Second-Largest Landlord
American Homes 4 Rent agreed to buy smaller rival American Residential Properties for $1.5 billion, including debt, which would nearly double the number of homes it owned and allow it to leverage higher economies of scale and efficiency (particularly important as housing prices have risen by more than 30% since the 2012 low). Upon closing, American Homes 4 Rent would own a total of 47,000 homes across 22 states, making it the second-largest landlord of single-family houses in the US next to Blackstone Group’s 50,000 homes.
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Christian Hudspeth is a company analyst for Dun & Bradstreet, researching and reporting on more than 1,000 banks and financial firms for Hoover’s database subscribers. Before joining Dun & Bradstreet, Christian was a managing editor, senior financial writer and analyst for a financial publishing company. His financial articles have been featured on MSN Money, Business Insider, Nasdaq.com, and several other well-known online publications. Before he was an editor, Christian worked in the commercial banking industry for seven years.