425: 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 leading regional bank in the Mid-Atlantic.

Summary

• Atlantic Union Bankshares Corporation (Atlantic Union) and Sandy Spring Bancorp (Sandy Spring) have entered into a definitive merger agreement.
• Atlantic Union will acquire Sandy Spring in an all-stock transaction valued at approximately $1.6 billion.
• Each outstanding share of Sandy Spring common stock will be converted into the right to receive 0.900 shares of Atlantic Union common stock.
• 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 as of September 30, 2024.
• The merger is expected to close by the end of the third quarter of 2025, pending regulatory and shareholder approvals.
• Atlantic Union will conduct a public offering of 9,859,155 shares of its common stock at a price of $35.50 per share, for an aggregate offering amount of $350.0 million.
• Atlantic Union has entered into a forward sale agreement with Morgan Stanley & Co. LLC relating to an aggregate of 9,859,155 shares of Company Common Stock.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger, highlighting the strategic and financial benefits for both companies and their stakeholders. The deal is expected to be accretive and create a leading regional bank.

Positives

• The merger creates the largest regional bank headquartered in the lower Mid-Atlantic.
• The combined company will have an enhanced presence in Northern Virginia and Maryland.
• The merger is expected to be significantly accretive to Atlantic Union's earnings per share.
• The combined company is expected to generate a high return on average tangible common equity.
• The merger is expected to result in a relatively short tangible book value earnback period.
• The combined company will have a strong capital position.
• The merger will approximately double Atlantic Unions wealth business by increasing assets under management by more than $6.5 billion.

Negatives

• The merger will result in tangible book value dilution for Atlantic Union.
• The merger is subject to customary closing conditions, including regulatory and shareholder approvals, which may not be obtained.
• The integration of the two companies may be more difficult, time-consuming, or costly than expected.
• The anticipated benefits of the proposed transaction may not be realized when expected or at all.

Risks

• Failure to obtain regulatory or shareholder approvals.
• Potential for a material adverse change in the financial condition of Atlantic Union or Sandy Spring.
• Changes in Atlantic Union's or Sandy Spring's share price before closing.
• Risks relating to the potential dilutive effect of shares of Atlantic Union's common stock to be issued in the proposed transaction.
• General competitive, economic, political and market conditions.
• Major catastrophes such as earthquakes, floods or other natural or human disasters, including infectious disease outbreaks.

Future Outlook

The combined company expects to benefit from enhanced scale, market diversity, and capabilities, with a focus on organic growth opportunities.

Management Comments

• John C. Asbury, President and Chief Executive Officer of Atlantic Union, stated that the partnership with Sandy Spring will create a preeminent regional bank.
• Daniel J. Schrider, Chair, President and CEO of Sandy Spring Bank, believes the combination will deliver enhanced scale, diversity in the market, and capabilities for their clients.

Industry Context

The acquisition reflects a trend of consolidation in the banking industry, as institutions seek to gain scale, improve efficiency, and expand their market presence.

Comparison to Industry Standards

• The pro forma financial metrics, such as ROA, ROTCE, and efficiency ratio, are projected to be in the top quartile compared to peers with assets between $20 billion and $80 billion.
• The combined company aims to achieve a higher level of performance 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 within a larger organization.
• Communities will benefit from a $9.5 billion community impact plan.

Next Steps

• Atlantic Union and Sandy Spring will seek regulatory and shareholder approvals for the merger.
• The companies will work to integrate their operations and systems following the closing of the transaction.
• Atlantic Union will focus on organic growth opportunities and continue to serve its customers and communities.

Key Dates