Valley National Bancorp (“Valley”) (NASDAQ: VLY) and Bank Leumi
Le-Israel Corporation (“Leumi”) announced today that they have
entered into a definitive merger agreement whereby Valley will
acquire Leumi, the US subsidiary of Bank Leumi Le-Israel B.M., and
parent company of Bank Leumi USA (“Bank Leumi”). This strategic
combination broadens Valley’s commercial product offerings and
enhances Valley’s funding verticals. As a result of the mutually
beneficial transaction, Valley will greatly expand its technology
and venture capital banking business, and Bank Leumi Le-Israel B.M.
will enhance its exposure to the U.S. banking market. This
combination further solidifies Valley’s position as a top-tier,
relationship-focused commercial bank. The pro forma company will be
the 29th largest publicly traded U.S. bank by assets1, and will be
well-positioned for strong, sustainable, and diversified growth.
Bank Leumi provides full-service relationship
banking for middle-market commercial clients and private banking
services for high net-worth individuals. As of June 30, 2021, Bank
Leumi had total assets of $8.4 billion, total deposits of $7.1
billion, and gross loans of $5.4 billion. The loan portfolio is
well diversified by asset class with nearly 1/3rd of the portfolio
in commercial and industrial loans. Bank Leumi operates five
commercial offices in New York, Los Angeles, Palo Alto, Chicago,
and Miami, a strategically located distribution network that drives
the geographic diversity of its loan portfolio. The bank’s
commercial focus has contributed to its exceptional funding base
which includes nearly $2 billion of low-cost deposits in the
technology and venture capital space.
With approximately 20% of revenue coming from
non-interest sources, the combination with Bank Leumi will increase
Valley’s revenue diversity. Bank Leumi’s fee income is primarily
driven by cash management services for commercial customers, and
investment management fees within Bank Leumi’s private bank. As of
June 30, 2021, the private bank contained approximately $4.1
billion of assets under management from both domestic and
international high net worth clients. Valley expects to leverage
Bank Leumi’s platform to further enhance and grow its own private
banking business.
The transaction is expected to be approximately
7% accretive to Valley’s 2023 earnings on a fully-phased in basis.
Tangible book value dilution is expected to be roughly 1% with an
earnback period of approximately one year. The transaction is
expected to be effectively neutral to Valley’s tangible common
equity to tangible asset ratio at close.
Under the terms of the merger agreement, the
shareholders of Leumi will receive 3.8025 shares of Valley common
stock and $5.08 in cash (subject to specified adjustments) for each
share of Leumi common stock they own. The transaction is valued at
an estimated $1,148 million, inclusive of the value of options,
based on Valley’s closing stock price on September 22, 2021. Upon
completion of the acquisition, Bank Leumi Le-Israel B.M. will
own over 14% of Valley’s common stock.
Valley and Bank Leumi Le-Israel B.M. have also
entered into an agreement providing for an ongoing business
relationship which will include loan participations and customer
referrals. The strategic relationship will enable Bank Leumi
Le-Israel B.M. to expand its activity in the US. The merger
agreement further provides that, effective as of and contingent
upon the merger, Valley will add two directors designated by Bank
Leumi Le-Israel B.M. to its board of directors. It is currently
anticipated that Bank Leumi President and CEO Avner Mendelson will
be one of these designees and join the board as Vice Chairman. Bank
Leumi Le-Israel B.M. has agreed to a four-year lock-up with respect
to the shares of Valley common stock to be issued in the
transaction, with 25% of the shares being released from the lock-up
on each anniversary of closing. Following the closing, Bank Leumi
Le-Israel B.M. will also be subject to customary voting and
standstill agreements.
Ira Robbins, Valley's Chairman, President &
CEO commented that, “We are extremely excited about the combination
with Bank Leumi and the diverse growth opportunities that we expect
the partnership will bring. Bank Leumi’s unique deposit verticals,
including the technology and venture capital business, will
continue the significant funding improvement that we have driven
over the last few years. On the lending side, Bank Leumi will add
diversification into niche C&I segments and new geographies
including in California and Illinois. We are also eager to scale
Bank Leumi’s private banking platform across Valley’s larger
customer base and footprint. Leveraging these new and distinct
platforms and skillsets will represent the next exciting phase of
our evolution as a premier full-service commercial
bank.”
Bank Leumi Le-Israel B.M.’s CEO Hanan Friedman
added that, "For Leumi, this is a strategic move designed to deepen
and expand our exposure to the U.S. The merger will provide Leumi
significant and unprecedented presence and market access for an
Israeli bank in the U.S. This is positive news for our commercial
and technology customers, who will enjoy a wider range of product
offerings and the capabilities of a top and prosperous U.S. bank.
Valley’s strong and experienced team which is headed by Chairman,
President and CEO Ira Robbins, will benefit from the addition of
Leumi USA team members. This ensures an ongoing commitment to
Israeli customers and Leumi USA employees, who will enjoy the
benefits of working with a top bank with an impressive growth
trajectory.”
Avner Mendelson, President and CEO of Bank Leumi
USA said, “After years of transformation, and significant growth
establishing Bank Leumi USA as a top middle market bank, this
merger is a natural step and strategic milestone in our growth
journey. In Valley, we have found an unparalleled cultural and
strategic partner with a shared client focus and commitment to
building lasting relationships. Our high-caliber talent, impressive
regional presence, and business lines will become growth engines
for Valley’s commercial business and support Valley’s growth
vision. I am excited and energized by the opportunities this merger
brings for our bank's clients and employees.”
This strategically compelling acquisition
introduces new and exciting business capabilities. Valley will be
well-positioned for growth in diverse and attractive new commercial
businesses and markets in Los Angeles, Palo Alto, and Chicago,
where Bank Leumi has approximately $1.7 billion of deposits and
approximately $1.5 billion of loans in aggregate. On a pro forma
basis as of June 30, 2021, and inclusive of the impact of the
proposed acquisition of The Westchester Bank which is expected to
close in the fourth quarter of 2021, Valley would have $51 billion
of assets, $42 billion of deposits and $39 billion of loans.
Valley has a track record of successfully
integrating acquisitions in a way that minimizes customer
disruption and delivers profitable growth while maintaining strong
credit metrics and a well-capitalized balance sheet. Integration
risk in the transaction is expected to be mitigated by Leumi’s
relative size and manageable physical footprint, Valley’s
familiarity with the majority of Bank Leumi’s operating markets and
the leadership and employee continuity that is anticipated. The
transaction is expected to close by late first quarter or early
second quarter of 2022, subject to the receipt of required
regulatory approvals, approval of Valley shareholders, as well as
other customary conditions. Leumi shareholders have already
approved the transaction.
Morgan Stanley & Co. LLC served as financial
advisor to Valley and Wachtell, Lipton, Rosen & Katz served as
its legal counsel. Piper Sandler & Co. served as financial
advisor to Leumi, and both Davis Polk & Wardwell LLP and Meitar
& Co. served as its legal counsel.
Investor Conference CallValley
executives will host a conference call with investors and the
financial community at 8:30 AM Eastern Standard Time, today to
discuss this transaction. Those wishing to participate in the call
may dial toll-free (866) 354-0432 and use Conference ID: 2881105.
An audio webcast will be available at
https://edge.media-server.com/mmc/p/d7awxt3qConference. Investor
presentation materials on this transaction will be made available
prior to the conference call at www.valley.com.
About ValleyAs the principal
subsidiary of Valley National Bancorp, Valley National Bank is a
regional bank with approximately $41 billion in assets as of June
30, 2021. Valley is committed to giving people and businesses the
power to succeed. Valley operates many convenient branch locations
across New Jersey, New York, Florida and Alabama, and is committed
to providing the most convenient service, the latest innovations
and an experienced and knowledgeable team dedicated to meeting
customer needs. Helping communities grow and prosper is the heart
of Valley’s corporate citizenship philosophy. To learn more about
Valley, go to www.valley.com or call our Customer Care Center at
800-522-4100.
About Leumi
Bank Leumi Le-Israel Corporation is the
U.S.-based holding company for Bank Leumi USA, a New York state
chartered bank offering a full range of commercial loan and deposit
products. Leumi has over 60 years of experience in the U.S.
commercial banking industry and currently operates commercial
offices in New York City, Chicago, Los Angeles, Palo Alto, and
Aventura (FL). To learn more about Leumi, go to
www.leumiusa.com.
Important Information and Where to Find
ItIn connection with the proposed acquisition (the
“Transaction”) by Valley National Bancorp (“Valley”) of Bank Leumi
Le-Israel Corporation (“Leumi”) and the issuance of shares of
Valley common stock as consideration in the Transaction, Valley
will file with the U.S. Securities and Exchange Commission (the
“SEC”) a proxy statement of Valley (the “Proxy Statement”), and
Valley may file with the SEC other relevant documents concerning
the Transaction. When completed, the definitive Proxy Statement
will be mailed to shareholders of Valley. This communication is not
a substitute for the Proxy Statement or any other document that
Valley may file with the SEC or send to its shareholders in
connection with the Transaction.
SHAREHOLDERS ARE URGED TO READ THE PROXY
STATEMENT REGARDING THE TRANSACTION CAREFULLY AND IN ITS ENTIRETY
WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC BY VALLEY, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT VALLEY, LEUMI AND THE TRANSACTION.
Free copies of the Proxy Statement, as well as
other filings containing information about Valley, may be obtained
at the SEC’s website (http://www.sec.gov) when they are filed by
Valley. You will also be able to obtain these documents, when they
are filed, free of charge, from Valley at www.valley.com under the
heading “Investor Relations.” Copies of the Proxy Statement can
also be obtained, when it becomes available, free of charge, at
Valley’s website at http://ir.valleynationalbank.com or by
directing a request to Ronald H. Janis, Senior Executive Vice
President & General Counsel, Valley National Bancorp, at 1455
Valley Road, Wayne, New Jersey 07470, telephone (973) 305-8800.
Participants in the
SolicitationValley, Leumi and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the shareholders of Valley in
respect of the Transaction. Information about Valley’s directors
and executive officers is available in its proxy statement for its
2021 annual meeting of shareholders, which was filed with the SEC
on March 8, 2021, and other documents filed by Valley with the SEC.
Information regarding the persons who may, under the rules of the
SEC, be deemed participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the Proxy Statement and
other relevant materials to be filed with the SEC when they become
available. Free copies of this document may be obtained as
described in the preceding paragraph.
Forward Looking Statements
The foregoing contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including but not limited to those regarding
the Transaction and the issuance of shares of Valley common stock
as consideration in the Transaction. Such statements are not
historical facts and include expressions about management’s
confidence and strategies and management’s expectations about new
and existing programs and products, relationships, opportunities,
taxation, technology and market conditions. These statements may be
identified by such forward-looking terminology as “will,”
“estimate,” “expect,” “believe,” “view,” “opportunity,” “allow,”
“continues,” “reflects,” “typically,” “usually,” “anticipate,” or
similar statements or variations of such terms. Such
forward-looking statements involve certain risks and
uncertainties.
Actual results may differ materially from such
forward-looking statements. In addition to factors previously
disclosed in Valley’s reports filed with the SEC and those
identified elsewhere in this press release, factors that may cause
actual results to differ from those contemplated by such
forward-looking statements include, but are not limited to, the
following: the possibility that the Transaction does not close when
expected or at all because shareholder, regulatory or other
approvals or other conditions to the closing of the Transaction are
not received or satisfied on a timely basis or at all (and the risk
that such approvals may result in the imposition of conditions that
could adversely affect Valley or the expected benefits of the
Transaction); the inability to realize expected cost savings and
synergies from the Transaction in amounts or in the timeframe
anticipated, including as a result of changes in, or problems
arising from, general economic and market conditions, interest and
exchange rates, monetary policy, laws and regulations and their
enforcement, and the degree of competition in the geographic and
business areas in which Valley and Leumi operate; changes in the
estimates of non-recurring charges; the diversion of management’s
attention and time from ongoing business operations and
opportunities on issues relating to the Transaction; the
possibility that costs or difficulties relating to Leumi
integration matters might be greater than expected, including as a
result of unexpected factors or events; changes in the stock price
of Valley from the date of the acquisition announcement to the
closing date; material adverse changes in Valley’s or Leumi’s
operations or earnings; the inability to retain customers and
qualified employees of Leumi; higher- or lower-than-expected income
tax expense or tax rates, including increases or decreases
resulting from changes in uncertain tax position liabilities, tax
laws, regulations and case law; weakness or a decline in the U.S.
economy, in particular in New Jersey, the New York Metropolitan
area (including Long Island), Florida, California or the Chicago
metropolitan area; an unexpected decline in commercial real estate
values within Valley’s or Leumi’s market areas, reputational risk
and potential adverse reactions of Valley’s or Leumi’s customers,
employees or other business partners, including those resulting
from the announcement or completion of the Transaction; the outcome
of any legal proceedings that may be instituted against Valley or
Leumi; and the impact of the global COVID-19 pandemic on Valley’s
or Leumi’s businesses, the ability to complete the Transaction or
any of the other foregoing risks. Further information regarding
Valley and factors which could affect the forward-looking
statements contained herein are set forth in Valley’s Annual Report
on Form 10-K for the year ended December 31, 2020, its Quarterly
Reports on Form 10-Q for the three-month periods ended March 31,
2021 and June 30, 2021, and its other filings with the SEC. Valley
assumes no obligation for updating any such forward-looking
statement at any time.
______________________1 Based on pro forma
assets of publicly traded banks headquartered in the US; financial
data sourced from S&P Global Market Intelligence
Contacts: |
Valley National
Bancorp |
|
Bank Leumi Le-Israel
Corporation |
Michael D.
Hagedorn |
|
Raja
Dakkuri |
Senior Executive Vice
President and |
|
Executive Vice
President and |
Chief Financial
Officer |
|
Chief Financial
Officer |
(973)
872-4885 |
|
(917)
542-2000 |
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