8-K: Atlantic Union Bankshares to Acquire Sandy Spring Bancorp in $1.6 Billion Deal

Atlantic Union Bankshares Corporation will acquire Sandy Spring Bancorp in an all-stock transaction valued at approximately $1.6 billion, creating a major regional bank in the Mid-Atlantic.

Summary

• Atlantic Union Bankshares Corporation (AUB) and Sandy Spring Bancorp (SASR) have agreed to merge in an all-stock transaction valued at about $1.6 billion.
• The merger will create the largest regional bank headquartered in the lower Mid-Atlantic.
• The combined company will have pro forma total assets of $39.2 billion, total deposits of $32.0 billion, and gross loans of $29.8 billion.
• Sandy Spring will add 53 branch locations and more than $6.5 billion in wealth assets under management to Atlantic Union.
• Each share of Sandy Spring common stock will be converted into 0.900 shares of Atlantic Union common stock.
• The transaction is expected to close by the end of the third quarter of 2025.
• Atlantic Union also priced a public offering of 9,859,155 shares of its common stock at $35.50 per share, for an aggregate amount of $350.0 million.
• The company expects to physically settle the forward sale agreement within approximately 18 months from the date of the agreement.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the merger, highlighting the strategic and financial benefits. The language is optimistic, emphasizing growth, scale, and shareholder value creation. The transaction is presented as a win-win for all stakeholders.

Positives

• The merger creates a preeminent regional bank with a strong presence in the Mid-Atlantic.
• The combined company will have enhanced scale, diversity, and capabilities.
• The transaction is expected to be accretive to earnings per share.
• The combined company will have a robust balance sheet and strong capital levels.
• The merger will provide greater opportunities for employees of both companies.
• The combined company will have a strong commitment to the communities it serves.

Risks

• The merger agreement could be terminated.
• Regulatory approvals may not be obtained or may impose conditions that could adversely affect the combined company.
• The anticipated benefits of the merger may not be realized.
• The integration of the two companies may be more difficult, time-consuming, or costly than expected.
• The transaction may be more expensive or take longer to complete than anticipated.
• There may be adverse reactions from customers or changes to business or employee relationships.
• There may be a material adverse change in the financial condition of either company.
• Changes in the share price of either company before closing could impact the deal.
• There are risks relating to the potential dilutive effect of shares of Atlantic Union common stock to be issued in the proposed transaction.
• General competitive, economic, political, and market conditions could impact the combined company.

Future Outlook

The combined company will focus on organic growth opportunities and will be better positioned to serve customers and communities while creating long-term shareholder value. The forward sale agreement is expected to be settled within 18 months.

Management Comments

• With todays announcement of our partnership with Sandy Spring, Atlantic Union will create a preeminent regional bank, with Virginia as its linchpin, that spans the lower mid-Atlantic into the Southeast and that is committed to the communities it serves.
• Our partnership with Atlantic Union is the right long-term decision for our shareholders, clients and employees.
• This combination will deliver enhanced scale, diversity in the market, and capabilities for our clients, and it will provide greater opportunities for our employees to grow within a larger organization.
• We believe that the combination of our two companies creates a uniquely valuable franchise that is able to better serve our customers as well as our communities, while creating long-term shareholder value.

Industry Context

This merger reflects a trend of consolidation in the regional banking sector, as institutions seek to gain scale, expand their market presence, and improve their competitive positioning. The combination of Atlantic Union and Sandy Spring will create a major player in the Mid-Atlantic region, potentially impacting other banks in the area.

Comparison to Industry Standards

• The combined company will be the largest regional bank headquartered in the lower Mid-Atlantic, surpassing other regional banks in the area.
• The pro forma financial metrics, such as ROA, ROTCE, and efficiency ratio, are expected to be in the top quartile of peer performance.
• The transaction is expected to be accretive to earnings per share by 23% in 2026, which is a strong indicator of value creation.
• The tangible book value earnback period of 2.0 years is relatively short, suggesting a quick recovery of any dilution.
• The pro forma CET1 ratio of 10.0% and total risk-based capital ratio of 13.8% indicate a strong capital position compared to industry standards.

Management Changes

Stakeholder Impact

• Shareholders are expected to benefit from earnings accretion and long-term value creation.
• Customers will have access to a broader range of products and services and an expanded branch network.
• Employees will have expanded career opportunities and firm mobility.
• Communities will benefit from a $9.5 billion community impact plan and increased investment.

Next Steps

• Obtain regulatory approvals for the merger.
• Obtain shareholder approvals from both Atlantic Union and Sandy Spring.
• Complete the public offering of Atlantic Union common stock.
• Physically settle the forward sale agreement within 18 months.
• Integrate the two companies and their operations.
• Implement the $9.5 billion community impact plan.

Key Dates

Keywords

merger, acquisition, regional bank, Atlantic Union Bankshares, Sandy Spring Bancorp, Mid-Atlantic, all-stock transaction, wealth management, branch locations, share exchange, capital raise, forward sale agreement