Latest news with #mergers
Globe and Mail
an hour ago
- Business
- Globe and Mail
2 Large Regional Bank Stocks That Could Get Acquired During the Trump Administration
The banking industry is ripe for consolidation. Although there were more than 4,500 banks in the U.S., as of last year, four, in particular, collectively control trillions in assets: JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. While smaller banks will keep gobbling each other up and merging to obtain scale, this could also take place in the large regional banking market, among banks with $75 billion to $700 billion in assets. Regulators under President Donald Trump's administration have given the sector the green light for mergers and acquisitions, a stance that wasn't embraced under former President Joe Biden's administration. If the large regional banks truly want to compete against the big four, they're going to have to get bigger. Acquisition candidates typically can command a nice premium for shareholders. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Here are two banks that could get acquired during the next four years. 1. Comerica: Tough size, attractive markets At the end of the first quarter of 2025, Comerica (NYSE: CMA) had about $78 billion in assets and operates in attractive U.S. banking markets like Texas and states in the fast-growing Southeast of the U.S. This is an awkward size for a regional bank these days, because it is too big to be a local bank, but not nearly big enough to compete with the bigger players. Furthermore, $100 billion has previously been a battleground for banking regulators under various administrations when thinking about the size threshold they consider too big to fail -- meaning they're so crucial to the financial system that regulators will bail them out if they are at risk of failing. As such, investors frequently have to reassess regulations and capital requirements for banks around this size. Last year, Comerica announced it will not be extending a banking relationship with the U.S. Treasury Department that provided it with $3 billion in noninterest-bearing deposits, which is essentially a free funding source, although the agreement will continue for the next few years before the transition, which could partly explain its low valuation relative to peers. When looking at acquisitions, it's important to look at a bank's price-to-tangible book value (TBV), which shows its price relative to its tangible equity, or what the bank might be worth if it were liquidated. The higher a bank's price-to-TBV, the more likely it is to be a buyer because its stock currency is more valuable, so it could buy banks with smaller price-to-TBVs and see less dilution in an all-stock or part-stock deal. Here is the price-to-TBV of several major U.S. regional banks. CMA Price to Tangible Book Value data by YCharts Now, just because Comerica sits at the bottom of the group doesn't mean it will automatically be acquired. However, it makes an acquisition more palatable for a buyer. At the end of the day, banks are sold and not bought, meaning Comerica is going to have to raise its hand if it wants to sell. Interestingly, though, Chief Executive Officer Curtis Farmer is 62 and has a change-in-control (CIC) agreement with the bank that would earn him a payout of more than $35 million in the event that the bank changes hands, among other potential benefits that could be lucrative. 2. KeyCorp: Recently sold minority stake KeyCorp (NYSE: KEY) is another bank that could be gone by the time the Trump administration ends. As you can see in the chart, the bank also falls lower in the pack in terms of price-to-TBV. However, KeyCorp could be attractive, due to its strong capital light, fee-based businesses, including investment banking and trust. Any bank that wants to compete with the big four needs to bulk up in investment banking, and acquiring KeyCorp would be a step in that direction. Additionally, KeyCorp last year sold a 14.9% stake to the Canadian-based lender Scotiabank for $2.8 billion in order to obtain more capital flexibility. This helped it restructure its bond portfolio, which fell underwater amid the higher-interest rate environment during the past few years. The agreement with Scotiabank only allows it to increase its stake in KeyCorp to 19.9% for the next five years, although some analysts have speculated on whether a full acquisition could be in Scotiabank's future. Still, I don't believe this prevents another bank from buying KeyCorp if the bank were to be interested in selling. KeyCorp's CEO Chris Gorman is 64 and also stands to make a lot of money if the bank is acquired, with a CIC agreement that would pay out close to $35.7 million. Should you invest $1,000 in Comerica right now? Before you buy stock in Comerica, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Comerica wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor 's total average return is978% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, JPMorgan Chase, PNC Financial Services, and U.S. Bancorp. The Motley Fool recommends Bank Of Nova Scotia and Regions Financial. The Motley Fool has a disclosure policy.
Reuters
a day ago
- Business
- Reuters
SPACs trigger bad case of Wall Street amnesia
NEW YORK, May 28 (Reuters Breakingviews) - Tragedy plus time is the formula for comedy, but on Wall Street it equals opportunity. Wait a while and even the costliest failures will be resurrected. Look no further than the phenomenon of cash-stuffed shells designed to find takeover targets, which are making an unlikely return just a few years after a fateful farce. Investors freely underwrote such blank-check firms in 2020 and 2021. In those two years alone, special-purpose acquisition companies raised some $250 billion with which to go shopping. Their 860 initial public offerings accounted for, opens new tab 62% of all market debuts, according to research outfit SPACInsider. Roughly half of them, however, failed to find a target within their typical two-year deadline, instead returning the cash to shareholders. They were the lucky ones. By custom, SPACs list at an initial price of $10. More than 90% of those that both found a merger partner and are still publicly listed trade below that all-important benchmark price as of early May. Dozens of them - including shared office-space lessor WeWork and electric-truck maker Lordstown Motors - collapsed, adding to the bonfire of billions. Disaster is no deterrent in finance, however. Onetime bond trader John Meriwether managed to raise money for an ill-fated second hedge fund following the $3.6 billion bailout orchestrated by the Federal Reserve of his highly leveraged Long-Term Capital Management. Jon Corzine was hired to run brokerage firm MF Global, and presided over its collapse in 2011, after he had already been ousted from both Goldman Sachs and the New Jersey governor's mansion. Before being elected U.S. president, Donald Trump kept luring investors into casino ventures despite his propensity for bankruptcy, opens new tab. Serial SPACsters flaunt a similar bravado. Among the 80 shell companies that have gone public this year or disclosed plans to do so, according to SPAC Research data, are ones sponsored by dealmaker Michael Klein, opens new tab, investment banking boutique Cantor Fitzgerald, opens new tab and buyout firm The Gores Group, opens new tab. The trio is part of a small club of 14 sponsors with at least eight SPACs apiece to their name, accounting for a combined 150. Even these impresarios have struggled, however. A fifth of their shell companies were liquidated. More than 40% are trading, or were sold, below the $10-a-share threshold, according to a Breakingviews analysis. Worse, there hasn't been much soul-searching about how to remake SPACs, beyond some enhanced disclosure requirements implemented, opens new tab last year by the U.S. Securities and Exchange Commission. There's a market nonetheless. This is partly because the money a blank-check firm raises is held in a trust typically earning interest from ultra-safe Treasury bills, and shareholders can get a refund on their contribution once the SPAC unveils a deal. Hedge fund managers therefore tend to regard shell companies as akin to fixed income investments with equity upside, which are especially appealing when markets swing wildly. The cash redemption rate in 2022 exceeded 80%. As CEOs and investors search for alternatives to sluggish traditional M&A and IPO markets, though, SPACs could represent a fresh opportunity, albeit with refinements. One would be to share the spoils, as started to become more of the norm. Sponsors typically receive a 20% stake in founder shares at a steep discount. Instead of keeping this entire 'promote,' setting some aside for other owners could persuade them not to redeem their shares. It would put real money on the table. Early SPAC advocate Chamath Palihapitiya boasted of making roughly $750 million from the vehicles he sponsored through his Social Capital, even as many other investors lost money. Another important factor is the size and cohort of investors a sponsor attracts by privately placing shares ahead of, or alongside, an acquisition. These private investments in public equity tailed off at the end of the boom. Their presence, depending on the reputation of the investors and the amount committed, can help validate a deal's valuation, one of the potential virtues of SPACs. Price discovery in an IPO can be dicey, as Venture Global (VG.N), opens new tab discovered earlier this year. The liquefied natural gas exporter had to slash its valuation after investors balked. Even then, shares tumbled when they began trading and are 48% below where they started. Simply having Fidelity or T. Rowe Price in a SPAC deal can't guarantee success, of course, but it at least adds an outside stamp of approval. Most important, however, is to seek healthier, more established companies as merger partners instead of unproven science projects. A SPAC is a poor substitute for early-stage venture-capital fundraising. The initial flood left a lot of firms hungry to do deals, though, in turn prematurely ushering too many private firms into publicly traded life. Gores provides a useful example of how deals can optimally work. In 2016, its first SPAC bought century-old Hostess Brands from buyout shop Apollo Global Management (APO.N), opens new tab and billionaire Dean Metropoulos for $725 million. JM Smucker (SJM.N), opens new tab paid $5.6 billion for the Twinkies maker seven years later. Verra Mobility's (VRRM.O), opens new tab share price also has more than doubled since another Gores SPAC acquired the electronic toll-payment service in 2018. The recent blank-check resurgence, by contrast, is sending mixed signals. Private equity firm Ares Management (ARES.N), opens new tab successfully extended the life of one it is sponsoring with only about 1% of shareholders redeeming, opens new tab, an indication of confidence. Backers including Soros Fund Management are kicking in $110 million of financing to supplement the $550 million of cash in its trust. And yet the vehicle is buying, opens new tab Kodiak Robotics, a self-driving truck technology startup that looks to be an incongruously early-stage venture for the New York Stock Exchange, in a $2.5 billion deal. Perhaps the biggest reason to remain skeptical about SPACs and their skewed economics is to consider which side of the trade buyout shops prefer: they are more likely to sponsor than sell into them. Collectively, private equity funds own stockpiles of aging companies that are proving difficult to sell or take public. If the industry starts embracing SPACs for exits, as occurred with Hostess and a handful of others, they might be worth a second look. For now, it's just a degenerative case of Wall Street amnesia. Follow @jgfarb, opens new tab on X
Zawya
2 days ago
- Business
- Zawya
Smooth business handovers: A survival guide for South Africa's entrepreneurs
In today's dynamic business environment, leadership transitions are inevitable. Whether due to a c-suite reshuffle, a merger, or an acquisition by a larger group, periods of transition can be destabilising for businesses of any size. In fact, research based on over 40,000 corporate acquisitions spanning over four decades has shown that 70% of mergers and acquisitions fail to fulfil their expectations. Amogelang Montane, human resources business partner at Business Partners Limited Amogelang Montane, human resources business partner at Business Partners Limited, believes that effective leadership is at the heart of any successful business transition. 'Any big change, when not managed properly, can result in operational inefficiencies, employee uncertainty, and even a knock to revenue. However, many of these results are often avoidable, and with a well-planned handover strategy, it's possible for your business to make it through these times of uncertainty.' While any change in leadership can be challenging to manage, Montane notes that mergers and acquisitions require particularly careful consideration – especially when a smaller business is being acquired by a larger company or corporation. 'When a business merges with another or is acquired by a larger group, the shift in company culture, operational processes, and management structures can cause significant disruption to the 'norm' employees have become used to. Small and medium enterprises (SMEs), in particular, may struggle to integrate into a larger corporate framework without a clear roadmap.' Montane lists four key considerations for entrepreneurs to ensure business continuity during these types of transitionary periods. - Clear communication Transparent communication with employees, customers, and other key stakeholders is vital. 'Ensuring that all parties are kept up to date about changes and their implications will help manage expectations and reduce uncertainty across the organisation,' says Montane. - Strategic planning A comprehensive transition strategy should be in place before any major leadership or structural change. This includes clear succession planning, especially for family-owned businesses and founder-led SMEs, notes Montane. 'These smaller, tight-knit businesses often face challenges when ownership or leadership is transferred. Without a structured succession plan, conflicts may arise, threatening the business's continuity,' he explains. - Talent retention It's estimated that 47% of key employees leave within the first year following a merger or acquisition, and 75% leave within the first three years. 'This is why keeping employees motivated and aligned with the company's vision during a transition is one of the greatest human resources responsibilities in a merger. The loss of talent after an acquisition can be so significant that it erodes value from the transaction,' says Montane. He adds that conducting due diligence around culture and operational processes is also critical when merging two organisations. 'While HR is responsible for supporting employees on a day-to-day basis, it is up to the leadership team to provide reassurance, guidance, and opportunities for professional growth to retain key talent.' - Financial stability Ensuring access to capital during periods of transition can help businesses to persevere through potential financial instability. 'As a financier to SMEs, we have seen first-hand how well-planned transitions supported by the right funding can ensure business continuity,' adds Montane. While leadership transitions can be daunting, they also present an opportunity for businesses to evolve and strengthen their competitive position. By implementing a structured approach, SMEs can mitigate risks and emerge stronger on the other side of change. 'As South Africa's SME sector continues to grow and evolve, businesses must embrace change as a constant. With the right leadership and strategic planning in place, transitions can be transformed into catalysts for success,' concludes Montane.
Bloomberg
2 days ago
- Business
- Bloomberg
JPMorgan Hires Top HSBC Dealmaker Kamal Jabre as Vice Chair
JPMorgan Chase & Co. is hiring HSBC Holdings Plc 's global head of mergers and acquisitions, Kamal Jabre. The London-based banker will join JPMorgan later this year as a vice chair of M&A to help expand the business in Europe, the Middle East and Africa, according to an internal memo seen by Bloomberg. He'll work closely with JPMorgan's coverage teams and partner with its financial sponsors, natural resources and Middle East and North Africa groups.
Bloomberg
2 days ago
- Business
- Bloomberg
JPMorgan Sees Asia Deals on the Horizon in Volatile Markets
Dealmaking in Asia Pacific is looking pretty buoyant as companies assess the best places to allocate capital in volatile times, according to JPMorgan Chase & Co. 's head of investment banking in the region, Paul Uren. While the veteran banker and his team are measured in the outlook for transactions in APAC this year, they are busy talking with clients about ways to diversify their businesses or supply chains, including through mergers and acquisitions. Selling non-core assets, raising capital and refinancing debt are also under discussion, Uren said in an interview in Hong Kong.
