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Valley Bank Acquiring Bank Leumi USA for $1.1B

Wayne-based Valley National Bancorp announced it has entered into a definitive merger agreement to acquire Leumi, the US subsidiary of Bank Leumi Le-Israel B.M., and parent company of Bank Leumi USA, for an estimated $1.1 billion.

This merger broadens Valley’s commercial product offerings. It also further solidifies Valley’s position as a top-tier, relationship-focused commercial bank. The pro forma company will be the 29th largest publicly traded U.S. bank by assets, and will be well-positioned for strong, sustainable, and diversified growth.

Through the merger, Valley will be well-positioned for growth in diverse and attractive new commercial businesses and markets in Los Angeles, Palo Alto, and Chicago, where Bank Leumi has approximately $1.7 billion of deposits and approximately $1.5 billion of loans in aggregate.

Ira Robbins, Valley’s chairman, president & CEO commented that, “We are extremely excited about the combination with Bank Leumi and the diverse growth opportunities that we expect the partnership will bring. Bank Leumi’s unique deposit verticals, including the technology and venture capital business, will continue the significant funding improvement that we have driven over the last few years. On the lending side, Bank Leumi will add diversification into niche C&I segments and new geographies including in California and Illinois.

Bank Leumi Le-Israel B.M.’s CEO Hanan Friedman added that, “For Leumi, this is a strategic move designed to deepen and expand our exposure to the U.S. The merger will provide Leumi significant and unprecedented presence and market access for an Israeli bank in the U.S. This is positive news for our commercial and technology customers, who will enjoy a wider range of product offerings and the capabilities of a top and prosperous U.S. bank.

Avner Mendelson, president and CEO of Bank Leumi USA said, “In Valley, we have found an unparalleled cultural and strategic partner with a shared client focus and commitment to building lasting relationships. Our high-caliber talent, impressive regional presence, and business lines will become growth engines for Valley’s commercial business and support Valley’s growth vision. I am excited and energized by the opportunities this merger brings for our bank’s clients and employees.”

Bank Leumi provides full-service relationship banking for middle-market commercial clients and private banking services for high net-worth individuals. As of June 30, 2021, Bank Leumi had total assets of $8.4 billion, total deposits of $7.1 billion, and gross loans of $5.4 billion. The loan portfolio is well diversified by asset class with nearly 1/3rd of the portfolio in commercial and industrial loans. Bank Leumi operates five commercial offices in New York, Los Angeles, Palo Alto, Chicago, and Miami, a strategically located distribution network that drives the geographic diversity of its loan portfolio. The bank’s commercial focus has contributed to its exceptional funding base which includes nearly $2 billion of low-cost deposits in the technology and venture capital space.

Under the terms of the merger agreement, the shareholders of Leumi will receive 3.8025 shares of Valley common stock and $5.08 in cash (subject to specified adjustments) for each share of Leumi common stock they own. The transaction is valued at an estimated $1,148 million, inclusive of the value of options, based on Valley’s closing stock price on Sept. 22. Upon completion of the acquisition, Bank Leumi Le-Israel B.M. will own over 14% of Valley’s common stock.

Morgan Stanley & Co. LLC served as financial advisor to Valley and Wachtell, Lipton, Rosen & Katz served as its legal counsel. Piper Sandler & Co. served as financial advisor to Leumi, and both Davis Polk & Wardwell LLP and Meitar & Co. served as its legal counsel.

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