NEW YORK (TheStreet) -- FirstMerit Corp. (FMER) shares are surging by 19.71% to $18.40 on Tuesday morning, after Huntington Bancshares (HBAN) announced that it would buy the rival company for about $3.4 billion in cash and stock.
The merger of these two banks would create a company that will have nearly $100 billion in assets, making it the largest bank in Ohio, the Wall Street Journal reports.
Under the terms of the deal, FirstMerit shareholders will receive 1.72 shares of Huntington stock and $5 in cash for each FirstMerit share they own.
"Today's announcement of the merger with Huntington Bancshares reflects a compelling and strategic opportunity to join two great companies and create enhanced value for our shareholders," FirstMerit CEO Paul Greig stated.
The transaction is projected to close in the third quarter. The consolidation comes as the banks have been challenged with regulatory costs and low interest rates dampening profits.
Additionally, this announcement was made during FirstMerit's fourth quarter 2015 earnings release. The company reported a profit of 33 cents a share on revenue of $254.13 million.
Analysts had expected the company to earn 34 cents a share on revenue of $259.10 million.
During the same period the year prior, the company earned 36 cents a share on revenue of $264.47 million.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate FIRSTMERIT CORP as a Buy with a ratings score of B. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: FMER