Citizens (CFG) to Buy Bowstring Assets, Boost M&A Advisory

In a bid to strengthen its M&A advisory business, Citizens Financial Group CFG recently announced an all cash deal to acquire certain assets of Bowstring Advisors. Bowstring provides a range of financial services to commercial and industrial clients nationwide. Though terms of the deal remain undisclosed, it is expected to close in the first half of 2019.

The acquisition will be performed through Citizens’ wholly owned subsidiary, Citizens Capital Markets (“CCMI”). Bowstring will be operating as a division of CCMI.  

With this deal, Citizens will be able to strengthen foothold in the Southeast region. Notably, the acquisition will complement the company’s current M&A and financial advisory capabilities.

Moreover, the company sees strong demand for M&As among mid-sized companies, which will further boost its near-term prospects.

Donald McCree, vice chairman and head of Commercial Banking at Citizens said, “The addition of the highly regarded Bowstring team more than doubles our M&A advisory business with deep knowledge in key industry sectors such as healthcare, technology and business services, while strengthening our coverage nationally and further enhancing our ability to deliver for our clients.”

Other Recent Deals

Earlier this month, BB&T Corporation BBT and SunTrust Banks STI announced an all-stock deal to merge, leading to creation of the sixth largest commercial bank in the United States (in terms of assets and deposits). The deal has been valued at $66 billion.

Further, in a reflection of the “merger of equals” deal, the combined company will operate under a new name and brand that will be determined prior to closing. Shareholders of both the companies are expected to reap benefits as the merger will result in earnings accretion.

In late January, TCF Financial TCF inked a deal with Chemical Financial. The all stock deal is valued at $3.6 billion. Upon its completion, TCF and Chemical shareholders will own 54% and 46% of the combined company, respectively, on a fully diluted basis.

Further, the transaction is projected to deliver 17% per share earnings accretion to Chemical and 31% per share earnings accretion to TCF by 2020.

Our Take

Citizens Financial’s involvement in strategic acquisitions reflect its strong capital position and focused approach to expand reach and product offerings. Additionally, the company will benefit from improving conditions in the domestic economy.

Shares of Citizens have gained around 4.4% in the past three months compared with the 5.4% growth witnessed by the industry it belongs to.

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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