Bank Leumi of Israel has agreed to merge Bank Leumi USA with Valley National Bancorp for a combined value of $1.2 billion, or 140% of existing equity. Bank Leumi expects to earn an after-tax profit of NIS 650-750 million ($203 million- $234 million) following the transaction.
Leumi stated that it will keep a 14% stake in the merged bank, making it the largest shareholder but not the controlling shareholder. Valley will pay for 90% of the transaction in the merged bank stock and 10% in cash.
The combined bank will rank 29th on the US stock exchange and will expand its commercial activities in a variety of strategic areas, including those in which Leumi USA operates, such as technology, venture capital, real estate development, and private banking.
Leumi USA is headquartered in New York City and has offices in Chicago, Florida, and California.
Leumi will appoint two directors to the merged bank’s board of directors as part of the merger, while Leumi USA CEO Avner Mendelson will serve as deputy chairman of the amalgamated bank.
Hanan Friedman, CEO of Bank Leumi, stated, “This is a strategic move for Leumi to deepen and increase our exposure to the United States. The combination will give Leumi an unprecedented level of presence and market access in the United States for an Israeli bank. This is good news for our commercial and technology customers, who will benefit from a broader product portfolio and the skills of a large and prosperous US bank.
“The inclusion of Leumi USA team members”, Friedman added, “will benefit Valley’s strong and experienced leadership team, which is led by Chairman, President, and CEO Ira Robbins. This demonstrates a continued commitment to Israeli clients and Leumi USA staff, who will benefit from working for a leading bank with an exceptional growth trajectory.”
As Mendelson put it, “After years of transformation and tremendous development that established Bank Leumi USA as a leading middle-market bank, this merger is a natural next step and strategic milestone on our growth path.
“We have found an unmatched cultural and strategic partner in Valley, one who shares our client emphasis and commitment to long-term relationships. Our high-caliber talent, formidable regional presence, and diverse business lines will serve as growth engines for Valley’s commercial operations, enabling Valley to achieve its growth strategy. I am both excited and enthused by the prospects that this combination will provide for our bank’s clients and employees.”
Ira Robbins, chairman, president, and CEO of Valley, stated, “We are extremely excited about the combination with Bank Leumi and the numerous growth potential we anticipate as a result of the alliance.
“Bank Leumi’s unique deposit verticals, which include technology and venture capital, will enable us to maintain the tremendous funding improvement we have achieved in recent years. Bank Leumi will diversify its lending portfolio by entering specialist C&I categories and expanding into new locations, including California and Illinois. Additionally, we are excited to expand Bank Leumi’s private banking platform throughout Valley’s bigger customer base and geographic footprint. Utilizing these new and diverse platforms and skill sets will mark the exciting next stage of our evolution as a great full-service commercial bank.”