People's United Financial, the holding company for People's United Bank, announced a definitive agreement to acquire Financial Federal Corporation in a stock and cash transaction valued at approximately $738 million. Completion of the transaction, which is expected to close in the first quarter of 2010, is subject to customary closing conditions, including the approval of the shareholders of Financial Federal.
Under the terms of the agreement, which has been approved by both companies' boards of directors, at closing Financial Federal shareholders will receive $11.27 in cash and one share of People's United common stock. Based on the closing price of People's United on November 20, 2009, the transaction is valued at $27.74 per Financial Federal Corporation share.
"The transaction is beneficial to the shareholders of both companies," said Paul R. Sinsheimer, chief executive officer of Financial Federal. "It substantially increases Financial Federal's growth potential by providing access to low cost funding from People's United's deposits. The match in the credit cultures is another positive, as Financial Federal's underwriting philosophy echoes that of People's United, targeting secured lending, underwriting all transactions, focusing on the middle market, and tailoring products to customer needs."
"We are delighted that Financial Federal Corporation is joining People's United," said Philip R. Sherringham, president and chief executive officer of People's United Financial. "Financial Federal is a leader in equipment financing and provides a valuable complement to our existing business lines, particularly, People's Capital and Leasing (PCLC), our equipment financing subsidiary. Furthermore, this transaction generates meaningful earnings accretion without diluting our capital ratios, which will continue to provide us with tremendous strategic flexibility in today's volatile markets.
"Outside of the transportation sector, there is virtually no overlap between Financial Federal's focus on construction and refuse, and PCLC's focus which, historically, has been on printing and packaging," Sherringham noted. "Moreover, this transaction offers opportunities for People's United to grow our highly-profitable equipment financing business with established, experienced staff in new markets throughout the country. Our combined portfolio will rank us 13th among U.S. bank-owned equipment finance businesses, according to data from Monitor, an industry publication."
Morgan Stanley acted as exclusive financial advisor to People's United and Simpson Thacher & Bartlett acted as legal counsel. Keefe Bruyette & Woods acted as exclusive financial advisor to Financial Federal Corporation and Covington & Burling served as legal counsel.
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