Fifth Third Bancorp (Nasdaq: FITB) today announced the following estimated effects to Fifth Third related to the recent actions of Vantiv Inc. (“Vantiv”).
Vantiv recently priced an initial public offering of its Class A shares (“the offering”). As a result of this offering, we expect to recognize a pre-tax gain of approximately $95 million (approximately $60 million after-tax) during the first quarter of 2012. Following the offering, Fifth Third continues to hold approximately 86 million Class B units of Vantiv Holding, LLC which may be exchanged for Class A Common Stock of Vantiv, Inc. on a one-for-one basis, as well as a warrant that is exercisable and exchangeable into Vantiv Inc. Class A Common Stock. These securities are subject to certain terms and restrictions.
Additionally, the underwriters of the offering have been granted an option, solely to cover over-allotments and exercisable for 30 days from the date of pricing, to purchase up to an additional 15 percent of the number of shares of common stock offered in the offering (exclusive of such over-allotment option) at the IPO share price. Any such option would be fulfilled by shares of the pre-offering owners of Vantiv (and ratably between Fifth Third and Advent International). Should this option be fully exercised, it would result in an additional pre-tax gain of approximately $17 million (approximately $11 million after-tax) to Fifth Third in the quarter that the option is exercised.
If the underwriters’ option is fully exercised, we would have a remaining economic interest of approximately 39 percent of Vantiv’s future earnings; if not exercised, our remaining economic interest would be approximately 40 percent. Our interest is accounted for under the equity method.
As previously announced on March 13, 2012, our plan to repurchase shares in an amount up to any after-tax gains realized by Fifth Third from the sale of Vantiv common shares was not objected to by the Federal Reserve in its Comprehensive Capital Analysis and Review process.