Union Bankshares Corp (UBSH.O) said on Monday it would acquire rival Xenith Bankshares Inc (XBKS.O) in an all-stock deal valued at nearly $695 million, as the U.S. community lender looks to expand into North Carolina and Maryland.
Richmond, Virginia based-Union Bankshares' offer of 0.9354 shares for each Xenith share translates to $29.67 per share and is at a 10.4 percent premium to Xenith's Friday close.
Shares of Xenith, also based in Richmond, were up 4.7 percent at $28.14 in light premarket trading.
"We expect that our combined statewide footprint will bring additional convenience to our customers and position us as a strong competitor against large regional institutions and smaller community banks alike – making us the pre-eminent community bank in Virginia," John Asbury, chief executive of Union Bankshares, said in a statement.
The deal value of $695 million was calculated based on Xenith's diluted shares outstanding of 23.41 million, as of March 31. The companies said the deal was valued at $701.2 million based on Union Bankshares' closing price of $31.72 on May 19.
The combined company would have total assets of $11.9 billion, total deposits of $9.2 billion and gross loans of $8.9 billion.
The deal is expected to close in early January 2018, subject to conditions including regulatory and shareholder approvals.
Keefe, Bruyette and Woods Inc acted as the financial adviser to Union Bankshares, while Sandler O'Neill + Partners LP advised Xenith.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Martina D'Couto)