It looks as though there was something to the rumors after all.
A couple of months after Bloomberg reported that Houston-based Cadence Bancorp (CADE) had sent bankers out to gauge interest in a sale of the company, the company found its suitor – agreeing to what is basically a merger of equals with Mississippi-based BancorpSouth (BXS).
This is a curious deal, and I can imagine that at least some Cadence shareholders won’t be too thrilled about it. I do see potential long-term synergies from this combination, and the stock-for-stock structure gives Cadence shareholders exposure to that upside, but I expect at least some shareholders would haven’t preferred the certainty of a larger upfront buyout valuation.
For BancorpSouth shareholders, I think this is a sound long-term move. Not only will the combination with Cadence give the company a chance to make better use of its lower-cost deposit base, the combination will diversify the lending base and add more exposure to more attractive markets, albeit with a higher initial level of credit and execution risk.
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