First Horizon National Corp (FHN.N) said it would buy fellow regional bank Capital Bank Financial Corp (CBF.O) for $2.2 billion to boost its presence in the fast-growing U.S. southeast market.
First Horizon's offer price of $40.83 per share represents a discount of about 3 percent to Capital Bank's Wednesday closing.
Capital Bank's shares, which have gained 40 percent in the past year, were trading just shy of the offer at $40.00 before the bell on Thursday.
The deal is the latest in a spree of mergers between regional U.S. banks that started last year, spurred by low interest rates, lagging returns on equity and tough regulations.
However, U.S. President Donald Trump has ordered reviews of major banking regulations put in place following the 2008 financial crisis. Federal Reserve policymakers have also signaled that a 'liftoff' of interest rates may finally get underway this year.
The combined company will have $40 billion in assets and $32 billion in deposits and will operate more than 300 branches across the Southeast, including Tennessee, South Carolina, Florida and Virginia.
First Horizon will offer 1.750 shares and $7.90 in cash for each Capital Bank share - a ratio of 80 percent stock and 20 percent cash.
Capital Bank shareholders will own a 29 percent stake in First Horizon after the deal closes.
Earlier this year, Sterling Bancorp (STL.N) said it would buy Astoria Financial Corp (AF.N) in an all-stock deal valued at about $2.2 billion.
In February, U.S. regional lender F.N.B. Corp (FNB.N) received regulatory clearances for its proposed acquisition of Yadkin Financial Corp (YDKN.N).
Barclays Capital and Morgan Stanley & Co were financial advisers to First Horizon, while UBS Investment Bank advised Capital Bank.
(Reporting by Diptendu Lahiri in Bengaluru; Editing by Supriya Kurane and Saumyadeb Chakrabarty)