People's United Financial, the holding company for People's United Bank, has entered into a definitive agreement to acquire Financial Federal Corporation in a stock and cash transaction valued at approximately $738 million.
Under the terms of the definitive agreement, which has been approved by both companies' boards of directors, at closing, Financial Federal shareholders will receive $11.27 in cash and one share of People's United common stock.
Based on the closing price of People's United on November 20, 2009, the transaction is valued at $27.74 per Financial Federal share. The actual value per Financial Federal share on consummation of the acquisition will depend on the share price of People's United at that time. The receipt of People's United stock by shareholders of Financial Federal is expected to be tax-free.
Morgan Stanley acted as exclusive financial advisor to People's United and Simpson Thacher & Bartlett acted as legal counsel. Keefe Bruyette & Woods acted as exclusive financial advisor to Financial Federal and Covington & Burling served as legal counsel.
Philip Sherringham, president and CEO of People's United Financial, said: "Financial Federal is a leader in equipment financing and provides a valuable complement to our existing business lines, particularly, People's Capital and Leasing, our equipment financing subsidiary. Furthermore, this transaction generates meaningful earnings accretion without diluting our capital ratios, which will continue to provide us with tremendous strategic flexibility in today's volatile markets."
Paul Sinsheimer, Financial Federal's CEO, said: "The transaction is beneficial to the shareholders of both companies. It substantially increases Financial Federal's growth potential by providing access to low cost funding from People's United's deposits. The match in the credit cultures is another positive, as Financial Federal's underwriting philosophy echoes that of People's United, targeting secured lending, underwriting all transactions, focusing on the middle market, and tailoring products to customer needs."