Huntington, TCF Financial To Merge In $22B Deal; Shares Gain 5%

Huntington Bancshares and TCF Financial Corp. on Dec. 13 announced an all-stock merger agreement with a total market value of $22 billion.

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The merger is expected to create a premier U.S. regional bank with dual headquarters in Detroit and Ohio. TCF shares rose 4.6%, while Huntington declined 4.4%.

The pro forma combined company will have assets, loans, and deposits worth $168 billion, $117 billion, and $134 billion, respectively. The merger has a cost-saving potential of $490 million, which is equivalent to 37% of TCF’s (TCF) noninterest expense. Huntington Bancshares expects the transaction to be 18% accretive to EPS in 2022, after factoring in the cost synergies. The merger will significantly improve Huntington’s market position, scale, and revenue growth opportunities.

Huntington (HBAN) is a regional bank holding company with $120 billion of assets and 839 full‐service branches. TCF Financial is a financial holding company with $48 billion in total assets.

According to the agreement, TCF Financial will merge into Huntington Bancshares, and the combined holding company and bank will operate under the Huntington name and brand following the closing of the transaction. Huntington CEO Stephen D. Steinour will become the Chairman and CEO of the holding company, and TCF Financial Chairman Gary Torgow will serve as Chairman of the bank’s board.

The merger is expected to close in Q221, pending shareholder and regulatory approvals.

Huntington shares have lost 14.3% YTD and are trading at a discount of 17.3% to their 52-week high. (See HBAN stock analysis on TipRanks)

The stock has a Moderate Buy analyst consensus based on 3 Buys and 3 Holds. The average price target of $12 implies downside potential of 7.2% to current levels.

Morgan Stanley analyst Ken Zerbe reiterated a Hold rating on the stock on Dec. 7, with a price target of $15. Zerbe expects Huntington to post EPS of $0.27 in Q420.