People's United Financial, Inc. (Nasdaq: PBCT), the holding company for People's United Bank, announced today a definitive agreement to acquire Financial Federal Corporation (NYSE: FIF) in a stock and cash transaction valued at approximately
. Completion of the transaction is subject to customary closing conditions, including the approval of the shareholders of Financial Federal.
People's United expects the transaction to be significantly accretive to operating earnings in 2010 and to have an IRR greater than 20%. Given Financial Federal's significant excess capital, the transaction is expected to have a slight positive impact on People's United's industry leading capital levels on a pro forma basis. The transaction is expected to close in the first quarter of 2010.
"We are delighted that Financial Federal Corporation is joining People's United," said Philip R. Sherringham, President and Chief Executive Officer of People's United Financial. "Financial Federal is a leader in equipment financing and provides a valuable complement to our existing business lines, particularly, People's Capital and Leasing (PCLC), our equipment financing subsidiary. Furthermore, this transaction generates meaningful earnings accretion without diluting our capital ratios, which will continue to provide us with tremendous strategic flexibility in today's volatile markets.
"Outside of the transportation sector, there is virtually no overlap between Financial Federal's focus on construction and refuse, and PCLC's focus which, historically, has been on printing and packaging," Sherringham noted. "Moreover, this transaction offers opportunities for People's United to grow our highly-profitable equipment financing business with established, experienced staff in new markets throughout the country. Our combined portfolio will rank us 13
among U.S. bank-owned equipment finance businesses, according to data from
, an industry publication."
"The transaction is beneficial to the shareholders of both companies," said
Paul R. Sinsheimer
, Chief Executive Officer of Financial Federal. "It substantially increases Financial Federal's growth potential by providing access to low cost funding from People's United's deposits. The match in the credit cultures is another positive, as Financial Federal's underwriting philosophy echoes that of People's United, targeting secured lending, underwriting all transactions, focusing on the middle market, and tailoring products to customer needs."