425: Old National Bancorp to Acquire Bremer Financial Corporation in $1.4 Billion Deal

Old National Bancorp is set to acquire Bremer Financial Corporation for approximately $1.4 billion, expanding its presence in the Midwest.

Summary

• Old National Bancorp has agreed to acquire Bremer Financial Corporation in a deal valued at approximately $1.4 billion.
• The merger agreement was unanimously approved by the boards of directors of both companies.
• Bremer shareholders will receive 4.182 shares of Old National common stock and $26.22 in cash for each share of Bremer common stock.
• The transaction is expected to close in the middle of 2025, subject to regulatory approvals and Bremer shareholder approval.
• The combined company will have over $70 billion in assets, based on September 30, 2024 figures.
• Old National will become the third-largest bank in the Twin Cities after the merger.
• The Otto Bremer Trust will have an approximate 11% ownership stake in Old National and a Trustee will join the Old National Board of Directors.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the merger, highlighting the strategic and financial benefits. The tone is optimistic, with a focus on growth and value creation. However, there are also some risks and uncertainties mentioned, which temper the overall sentiment.

Positives

• The merger will significantly expand Old Nationals footprint in the Midwest.
• The combined company will have a larger balance sheet and enhanced resources to serve customers.
• The transaction is expected to be accretive to Old Nationals earnings per share.
• The partnership is expected to create a premier regional bank in the Midwest.
• The Otto Bremer Trust will have a significant ownership stake in Old National and a Trustee will join the Old National Board of Directors.

Negatives

• The transaction is subject to regulatory approvals and Bremer shareholder approval, which could delay or prevent the merger.
• The integration of the two companies may be more difficult, time-consuming, or costly than expected.
• There is a risk that the anticipated benefits of the transaction may not be realized.
• The transaction may result in potential adverse reactions from customers or changes to business or employee relationships.

Risks

• The merger agreement could be terminated if certain conditions are not met.
• Regulatory approvals may result in conditions that could adversely affect the combined company.
• Legal proceedings could be instituted against Old National or Bremer.
• The integration of the two companies may be more difficult, time-consuming, or costly than expected.
• There is a risk that the anticipated benefits of the transaction may not be realized.
• The transaction may result in potential adverse reactions from customers or changes to business or employee relationships.
• A material adverse change in the financial condition of Old National or Bremer could occur.
• Changes in Old Nationals share price before closing could impact the deal.
• The potential dilutive effect of shares of Old Nationals common stock to be issued in the proposed transaction.
• General competitive, economic, political and market conditions could impact the deal.
• Major catastrophes such as earthquakes, floods or other natural or human disasters, including infectious disease outbreaks could impact the deal.

Future Outlook

The combined company is expected to have a larger balance sheet, enhanced resources, and a broader reach in the Midwest, with the potential for accelerated top quartile returns and shareholder value creation.

Management Comments

• Old National Chairman and CEO Jim Ryan stated that the partnership represents an outstanding fit between two highly compatible, relationshipand community-focused banks.
• Bremer President and CEO Jeanne Crain stated that they have confidence they found a great fit with Old National.
• The Otto Bremer Trust commented that the partnership expands the scope of what can be accomplished for and within our communities.

Industry Context

This merger reflects a trend of consolidation in the banking industry, as institutions seek to gain scale and expand their market presence. The combination of Old National and Bremer will create a significant regional player in the Midwest.

Comparison to Industry Standards

• The combined company will have over $70 billion in assets, placing it among the top 30 banking companies headquartered in the United States.
• Old National will become the third-largest bank in the Twin Cities, indicating a significant market presence.
• The transaction is expected to be accretive to Old Nationals earnings per share, suggesting a positive financial impact compared to industry peers.
• The pro forma 2026E ROAA of ~1.3% and ROTCE of 18.4% are expected to be in the top quartile of the industry.

Management Changes

Stakeholder Impact

• Shareholders of Bremer will receive a combination of cash and Old National stock.
• Customers of both banks will have access to a larger network and enhanced services.
• Employees of both banks will be integrated into the combined company.
• Communities served by both banks will benefit from increased investment and support.

Next Steps

• Obtain regulatory approvals for the merger.
• Obtain Bremer shareholder approval for the merger.
• Complete the public offering of Old National common stock.
• Complete the merger transaction in the middle of 2025.
• Integrate the two companies and realize cost savings and revenue synergies.

Key Dates

Keywords

merger, acquisition, bank, financial services, Old National Bancorp, Bremer Financial Corporation, Midwest, shareholders, regulatory approvals, Otto Bremer Trust