(RF - Get Report)
agreed to acquire fellow Birmingham, Ala., bank
for $9.8 billion in stock.
The deal, which was first reported late Wednesday by the
Wall Street Journal
, will unite two midsized southern financial groups and create the 10th largest bank in the U.S., with $140 billion in assets and more than $100 billion in deposits. The combined institution will have a major presence in seven southern states.
Terms of the acquisition call for Regions, with a market capitalization of about $16.2 billion, to exchange $28.33 worth of stock for each AmSouth share. AmSouth closed Wednesday at $28.90; its market capitalization was $10 billion.
AmSouth's CEO, C. Dowd Ritter, will be president and chief executive of the combined company, while Regions CEO and president, Jackson W. Moore, will be its chairman.
The companies expect the merger to result in annual pretax cost savings of $400 million, or 10% of the combined cost base, with about $150 million of that occurring in 2007. Restructuring costs will total $700 million, the banks said.
"These companies complement each other in many ways, and together, led by one of the strongest management teams in the business, we will have an even greater ability to deliver superior service to our customers," the banks said in a statement. "All of that translates to a greater opportunity for increased shareholder value. The appeal of this combination by every measure -- strategically, financially or operationally -- is extraordinary."