Citizens Banking Corp. to Acquire Republic Bancorp Inc. for 2.80 Times Revenue

Weekly Corporate Growth Report, Jul 3, 2006

The Deal: Citizens Banking Corporation has agreed to purchase Republic Bancorp Inc. in a cash-and-stock transaction. Under the terms of the deal, each share of Republic Bancorp will be exchanged for 0.4378 of a Citizens share and $2.08 in cash. About 85 percent of the payment will be made in stock. The deal values Republic at $13.86 per share, a premium of 31 percent over the bank's closing price prior to the deal announcement. The companies expect the transaction, which still requires shareholder and regulatory approvals, to close in the final quarter of 2006.

Discussion: Republic Bancorp is the holding company for Republic Bank. The bank operates nearly 100 offices throughout Michigan and in Cleveland and Indianapolis. Residential mortgages make up almost half of the bank's loan portfolio and commercial real estate loans make up nearly a third. Republic Bancorp should not be confused with the Kentucky firm of the same name.

Citizens Banking is a holding company that operates two banks. The company's Citizens Bank operates more than 170 branches in Michigan and Wisconsin, while its F&M bank operates about a dozen in Iowa. Other subsidiaries offer brokerage services, lease financing, insurance, and annuities.

The merger will create a new banking company, to be known as Citizens Republic Bancorp. The new company will have $13.9 billion in assets, $8.6 billion in deposits, and will operate 275 bank branches in five Midwestern states.