Mechanics Bank agreed to acquire Rabobank in a strategic business combination transaction valued at approximately $2.1 billion. The transaction has been approved by each party’s authorizing board of directors.
Mechanics Bank is a 114-year-old full-service community bank based in Walnut Creek, CA, with 44 branches throughout California and more than $6 billion in assets. Headquartered in Roseville, CA, Rabobank is a nationally chartered bank with 100 branches and more than $13 billion in assets. The combined entity would operate under the Mechanics Bank name with 144 branches and in excess of $17 billion in total assets.
Mechanics will acquire Rabobank’s retail, business banking, commercial real estate, mortgage and wealth management businesses. Not included in the transaction will be food and agribusiness assets, which, with limited exceptions, will transfer to Rabobank’s affiliate, Rabo AgriFinance located in St Louis.
Total consideration for the transaction will be subject to customary purchase price adjustments at closing. As part of the total consideration payable in the transaction, Rabobank Group will receive 9.9% of the outstanding shares of Mechanics Bank after giving effect to the transaction. Currently, 79% of Mechanics Bank’s outstanding shares are owned by Ford Financial Fund II.
“Bringing Rabobank, N.A. together with Mechanics Bank gives us a great opportunity to fill an established gap between the big banks and smaller community banks throughout the state,” said John DeCero, Mechanics president and CEO. “We are two established institutions with values and principles that align closely. There’s very little geographic overlap and significant potential for value creation for both parties to this combination, and we believe that the new Mechanics Bank will be able to leverage our common strengths at a scale that will benefit all of our clients, our shareholders, and the communities we serve.”
“This is a unique opportunity to merge two high-performing consumer and commercial banks with common values and deep roots in California,” said Mark Borrecco, CEO of Rabobank. “Both organizations take pride in putting their customers first and possess a strong sense of community.”
Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals. The transaction is expected to close in the third quarter of 2019.
Lazard Freres & Co. served as financial advisor to Rabobank on the transaction, while Sullivan & Cromwell served as its legal advisor. Wachtell, Lipton, Rosen & Katz served as legal advisor to Mechanics Bank, while Credit Suisse Securities served as its financial advisor.
University of Pennsylvania organizational psychology professor Adam Grant once said, “The hallmark of originality is rejecting the default and exploring whether a better option exists.” Consider the story of eyeglass company Warby Parker. As college students buried in debt and... read more
Being a broker is a lot like being a juggler in a circus, but instead of juggling rings, we juggle relationships. As brokers, we are the point of contact for everyone involved in the transaction, including the funder, the customer,... read more