Fifth Third Bancorp Announces Net Exercise Of Vantiv Warrant And Associated Secondary Offering Of Vantiv Shares

On November 21, 2016, Vantiv, Inc. (NYSE: VNTV) conducted a secondary offering of 4.8 million shares of its Class A common stock on behalf of Fifth Third (Nasdaq: FITB). Vantiv is also concurrently repurchasing 850,000 shares of Vantiv Class A common stock from Fifth Third. The 5.65 million shares being sold by Fifth Third through these transactions were obtained through the net exercise of the entire remaining warrant position in Vantiv Holding, LLC and the exchange of those Vantiv Holding, LLC units for Class A shares of common stock in Vantiv, Inc. The warrant position gave Fifth Third the right to purchase approximately 7.8 million Class C units at a $15.98 strike price, which was settled through the net issuance of 5.65 million units.

The warrant exercise and related sale of Vantiv stock is consistent with Fifth Third's goal of monetizing its remaining stake in Vantiv over time. The exercise of the entire remaining warrant will also serve to reduce the volatility of Fifth Third's earnings by eliminating fair value adjustments related to the warrant. "We continue to take a deliberate and thoughtful approach to reducing our ownership interests in Vantiv," said Greg Carmichael, Chief Executive Officer of Fifth Third. "Since the sale of a majority interest in Vantiv in 2009, the warrant position has generated approximately $528 million in after-tax value for Fifth Third's shareholders."

During the fourth quarter, Fifth Third expects to recognize a pre-tax gain of approximately $9 million (approximately $6 million after tax) related to these transactions. It will also add approximately 4 bps to Fifth Third's Common Equity Tier 1 ratio. Following the offering and concurrent repurchase of shares by Vantiv, Inc., Fifth Third will beneficially own approximately 17.9% of Vantiv's equity through its ownership of approximately 35 million Class B units of Vantiv Holding, LLC.

If you liked this article you might like

How to Make Easy Money on Apple's iPhone X Worldwide Reveal: Market Recon

14 Bank Stocks That Will Either Surge or Do Nothing

Analysts' Actions -- Beazer Homes, Chevron, Ecolab, Sherwin-Williams and More

Bullish and Bearish Reversals for This Week