On Monday, Old National Bancorp (NASDAQ: ONB), the regional lender, said it will buy privately held Bremer Financial in a $1.40 billion cash-and-stock deal, creating a combined bank with over $70 billion in assets.
Bremer shareholders will receive 4.182 shares of Old National and $26.22 in cash, valuing the lender at $116.76 per share.
Shares of Indiana-based Old National, which has about $54 billion in assets, jumped 7.6%, hitting their highest since September 2008.
Dealmaking between regional lenders has surged this year as they seek scale to better compete against bigger rivals, and is expected to get a further boost from President-elect Donald Trump’s lenient stance on capital rules and merger approvals.
The transaction will bolster Old National’s footprint in Minnesota, North Dakota, and Wisconsin and be the biggest regional bank deal by assets this year, eclipsing SouthState’s (NYSE: SSB) acquisition of Independent Bank (NASDAQ: INDB).
“While we were expecting a longer M&A pause at Old National, Bremer was too good to pass up,” Stephens analyst Terry McEvoy said.
Founded in 1943, Minnesota-based Bremer has $16.2 billion in assets and is majority-owned by the Otto Bremer Trust.
The trust was founded in 1944 by Otto Bremer, a German immigrant who invested in many upper Midwest banks during the Great Depression.
It will own about 11% of Old National once the deal is closed, which is expected to be in mid-2025.
The deal will boost the 190-year-old lender’s earnings per share by 22% by 2026-end.
Piper Sandler analysts said the better penetration of the Minneapolis-St. Paul region was the deal’s main strategic plus, adding that the financials look compelling for Old National shareholders.
Separately, Old National (NASDAQ: ONB) sold 19 million shares in a stock offering at $21 each for $400 million.
Citi and Squire Patton Boggs were the advisers to Old National. J.P. Morgan and Wachtell, Lipton, Rosen & Katz advised Bremer.
Keefe, Bruyette & Woods, and Sullivan & Cromwell advised Otto Bremer Trust.
