Companies tend to merge in order to become even bigger and better together. This is exactly what is happening with two major banks, who have a major presence in states throughout the Midwest. Huntington Bancshares Inc. of the Columbus area has acquired FirstMerit Corp of Akron to create a company, which will value $3.4 billion in both cash and stock. This new bank would also create close to $100 billion in assets.
Reasons behind the acquisition
Huntington Bancshares Inc. is currently one of the biggest banks in the state of Ohio, and after an acquisition with FirstMerit, it will be the largest, based on deposit. The bank will also rank number two for the states of Ohio and Michigan combined. Huntington has a goal of expanding in the state of Michigan, which is another reason the acquisition just makes sense. The Federal Deposit Insurance Corporation stated that Huntington was the sixth-largest bank in the state of Michigan, while FirstMerit was the ninth. Combining forces could allow the banks to rank higher. For now, they will remain the sixth-largest in Michigan, with $14.6 billion and a 7.7 percent share. Compare these numbers to the number one ranked bank, which is Chase Bank with $29.1 billion in deposits and a 20.5 percent share, and you can see Huntington is doing well to make their presence known in Michigan.
Acquisition not a good deal for employees
As with any acquisition, cuts will most likely have to be made. Combined, Huntington and FirstMerit will have about 339 branches throughout the state. This is a much larger number than other bank, so closing some of these locations is inevitable. Chairman and CEO of Huntington, Steve Steinour, stated that there would in fact be layoffs, but no specific details were given. Employees who currently work at FirstMerit branches will be provided opportunities for other positions. Still, the uncertainty for employees has kept them on edge. Although employees might be nervous, expansion plans for the acquisition have already been discussed. One of these plans is to open 43 full-service banking branches in Meijer Inc. locations in Michigan. In doing this, they would create about 250 jobs. This seems to be a step in the right direction.
Huntington and FirstMerit combine
Steinour went on to talk about how he is excited about the combination of two great banks. FirstMerit CEO, Paul Greig, said that they have competed with Huntington for years and have won some and lost some. Now they will be able to combine forces to develop great things for the company. FirstMerit has about $25.5 billion in assets and employs close to 4,000 people throughout the states of Ohio, Michigan, Wisconsin and Pennsylvania. Their headquarters is located in Akron, Ohio where half of those employees work. With the acquisition, both CEO’s plan to keep the Akron location a prime spot for the area, evening moving some business units from Columbus to the Akron area. In addition, four members of the FirstMerit board of directors will sit with the Huntington board.
This acquisition is pending regulatory approval, which is expected to be completed by the third quarter of 2016. It seems as though this is a great deal for all parties and the bank acquisition can become a great power house, not only in Ohio, but in other Midwestern states as well.