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Fulton Financial (FULT) Gets Regulatory Nod to Buy Prudential

Zacks Equity Research
·4-min read

Fulton Financial Corporation FULT has received approval from the Federal Reserve Bank of Philadelphia, and the Pennsylvania Department of Banking and Securities for the previously-announced acquisition of Prudential Bancorp, Inc. PBIP. This March, FULT and PBIP entered a merger agreement for Prudential to merge with and into Fulton Financial.

Fulton Financial’s chairman and CEO, E. Philip Wenger, stated, “These regulatory approvals mark an important milestone in this acquisition, which will further strengthen Fulton’s presence in the Philadelphia region. With these approvals, we remain on track to bring our talented teams together to help even more customers and communities in Philadelphia achieve financial success.”

The stock and cash deal is expected to close in the third quarter of 2022 and remains subject to the approval of Prudential shareholders.

With assets worth $26 billion, Fulton Financial provides financial services through 200 financial centers in Pennsylvania, Delaware, Maryland, New Jersey and Virginia. Then again, Prudential is the holding company of Prudential Bank, a Pennsylvania-chartered savings bank with assets of $1.1 billion.

The acquisition of Prudential is expected to accelerate Fulton Financial’s Philadelphia and urban market strategies. The deal will also provide a strategically important market for FULT’s organic growth and expansion.

Terms of the Deal and Financial Impact

Based on the 10-day volume weighted average share price of Fulton Financial’s common stock on Mar 1, the deal is valued at $142.1 million or $18.01 per Prudential’s common stock.

Nearly 80% of the total consideration will be paid through Fulton Financial’s common stock and the remaining 20% will be paid in cash.

Per the agreement, Prudential shareholders will receive 0.7974 shares of Fulton Financial’s common stock for each of their own shares held and $28 million in cash.

The transaction is expected to qualify as a tax-free exchange for shares received by Prudential shareholders.

Following the deal closure, Prudential Bank will be merged into Fulton Financial’s subsidiary, Fulton Bank, N.A.

At the time of the deal announcement, it was expected that the merger would result in cost savings of 45%. Also, it was expected to result in pre-tax charges of $16.5 million and after-tax charges of $14 million.

In 2023, the merger is expected to be accretive to earnings per share by 3.5%. Based on the cross-over method, a less than 1% dilution to tangible book value with an earn-back period of 1.2 years is projected.

So far this year, shares of Fulton Financial have lost 9.3% compared with a 16.5% decline of the industry.

 

Zacks Investment Research
Zacks Investment Research


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Currently, FULT carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Firms

With a view to help its clients build long-term financial wellness, Truist Financial Corporation TFC acquired the award-winning gamified finance mobile app, Long Game. Long Game changes the way people engage with their banks. The mobile finance app uses prize-linked savings and casual gaming to motivate smart financial behavior.

Truist Financial is expected to use Long Game’s innovative technology to inspire and build better lives and communities.

Itaú Unibanco Holding S.A ITUB announced on Apr 29, 2022, the completion of its acquisition of 11.36% equity interest in the total capital of XP Inc. for a deal value of R$ 8 billion.

The acquisition of XP is not expected to have any material impact on Itaú Unibanco’s current fiscal year’s results. Further, there will be no change in the corporate governance of XP as a result of the acquisition. ITUB received approval from the Central Bank of Brazil to acquire the minority interest in XP in November 2021.


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Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report
 
Fulton Financial Corporation (FULT) : Free Stock Analysis Report
 
Prudential Bancorp, Inc. (PBIP) : Free Stock Analysis Report
 
Truist Financial Corporation (TFC) : Free Stock Analysis Report
 
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