Akron-based FirstMerit Corp. is being acquired by Huntington Bancshares Inc., the banks announced late Monday night.
The deal, valued at $3.4 billion, is a stock-and-cash transaction and will create the No. 1 bank by deposits in Ohio with a combined estimated $100 billion in assets and a footprint in eight Midwestern states.
The deal must receive regulatory approval and is anticipated to close in the third quarter of the year, said Steve Steinour, chief executive of Columbus-based Huntington.
In a phone interview Monday evening, Steinour said the deal is great for both banks.
The company will go by the Huntington name.
He stressed Huntington’s commitment to Akron and FirstMerit’s legacy in the city.
“We’re making certain commitments to Akron. These are really important,” said Steinour. “Akron is going to wake up and wonder about things. We aspire to be a good corporate citizen in Akron.”
Steinour said details are still being worked out and there are still things he and other top management don’t know, as the circle of people involved in the deal was small during negotiations.
Steinour said it is Huntington’s understanding that FirstMerit owns or is the majority tenant for several of the buildings in downtown Akron, including the recognizable white FirstMerit tower in downtown Akron’s skyline.
“We will be in downtown Akron,” Steinour said, saying the new bank will have a significant presence amid the existing downtown campus. Huntington headquarters will remain in Columbus, he said.
Steinour said Huntington is keenly aware of FirstMerit’s legacy and importance in Akron and wants to maintain that for Huntington.
“We are setting up a Huntington Foundation to be located in Akron,” he said. “We’re making a commitment of $20 million — $2 million a year for 10 years — to help the community, the city, those in need. The grassroots things that make the city dynamic and to help people. We’re very pleased to do that and I think that’s an important element.”
Steinour will be in the downtown Akron headquarters Tuesday morning to talk to senior management and employees and tour the FirstMerit campus for the first time.
Steinour said he had not yet been to the Akron campus, saying if he had been seen in the building, news of the merger could have leaked out.
“I’m also hoping I can visit with the mayor in the afternoon,” Steinour said of Akron Mayor Dan Horrigan.
Horrigan could not be reached for comment Monday evening.
Steinour said the combined companies will have redundancies in some positions and there will be some FirstMerit layoffs. He said it was too early to say how many and that the company would be working to keep those numbers to a minimum. Steinour also said he would be asking FirstMerit employees to be open to trying new jobs for the combined company.
“We will use our best efforts to maintain the employment that exists today. It may go down a bit at the start, but we expect to have the same level of employment two years from now that exists today, which is 1,200 jobs in Akron,” he said.
There will be branch closures because many Huntington and FirstMerit branches are near each other, Steinour said. However, he stressed that “if you’re in a branch, you’ve got a job with Huntington.”
Severance packages
Employees who will be laid off will receive severance packages and will get priority access to posted job openings, he said.
“There will be some layoffs. I don’t know what that is. We will endeavor to place people in jobs rather than lay them off. We’ve got six to eight months before this will close,” he said of the deal.
FirstMerit CEO Paul Greig, who joined the bank in 2006, will retire, said Steinour.
“We’ve asked him to work with us as a consultant for a couple of years,” Steinour said. “We have enormous respect for him and his skills. He wants to play some golf. He’s been at it for 10 years.”
Plans for other top FirstMerit management have not yet been determined.
“We’ve seen a lot of talent. We’ll be adding people to the Huntington team,” he said. Some of them may be asked to stay in Akron or move to Columbus and some Columbus Huntington managers may be asked to move to Akron, he said.
Calls to FirstMerit officials were not returned Monday evening.
For Huntington, which is celebrating its 150th anniversary, the FirstMerit acquisition gives the company new branches in Wisconsin and Illinois and strengthens its now six-state footprint to eight. Huntington is currently in West Virginia, Western Pennsylvania, Ohio, Northern Kentucky, Indiana and Michigan.
Steinour said Huntington has had some acquisitions, but this is the largest.
He first approached Greig of FirstMerit about eight months ago and they’ve been talking “off and on” since.
“There’s been a lot to consider. This is a difficult decision for a board to come to and difficult for management. This is a 170-year-old institution. They had to get comfortable with our strategy,” Steinour said.
FirstMerit traces it roots to the opening of the Old Phoenix Bank in Medina in 1845, according to the company’s website.
In 1981, First Bancorporation of Ohio formed with the merger of First National Bank of Ohio and Old Phoenix National Bank of Medina.
In recent years, the Akron-based corporation has been aggressively expanding through acquisitions. In 2009, FirstMerit reached a deal to acquire $1.2 billion of deposits and 24 Chicago-area branches from St. Louis-based First Bank. In 2013, FirstMerit closed on another major deal to acquire Citizens Republic Bancorp, a 140-year-old institution headquartered in Flint, Mich., serving customers in Michigan, Ohio and Wisconsin. The deal made FirstMerit the sixth-largest bank headquartered in the Midwest, bank officials said at the time.
Similar philosophies
FirstMerit and Huntington have similar philosophies, catering to small and medium-sized businesses. Four members of the FirstMerit board of directors will join the Huntington board, specifically two from Akron.
“We almost fit hand in glove across the board,” Steinour said. “We are confident that together we have a better future than either does separately.”
Huntington will host an earnings call at 9 a.m. Tuesday morning. FirstMerit will not host its previously scheduled earnings call Tuesday.
After-hours trading
FirstMerit shares were up about 10.5 percent in after-hours trading Monday night as news of the deal spread. The stock closed down 71 cents (4.4 percent) to $15.37 at market close on Monday.
Huntington shares dropped about 3.8 percent during trading Monday to close at $8.50 per share, down 35 cents.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty.