Fifth Third Bancorp (NASDAQ: FITB) has announced its latest acquisition. The regional bank has reached an agreement to buy rival MB Financial Inc. (NASDAQ: MBFI). The agreement will see Fifth Third paying about $4.7 billion for the company in a stock-and-cash deal. The closing of the deal is expected by the end of the year.

According to the terms of the agreement, each MB Financial shareholder will get $54.20 per share for their stake in the company. The price represents a 24 percent premium to MB Financial’s last close. The amount will be paid with 1.45 shares of Fifth Third common stock and $5.54 in cash.

Fifth Third Bank has outlined some of its plans for the combined company. It will be run by MB Financial Chief Executive Officer Mitch Feiger as CEO and Chairman of Fifth Third Chicago. Other key members will also join the combined company and two members of MB Financial’s board were expected to join the Fifth Third Bancorp board.

Fifth Third expects pretax cost savings of $255 million annually after the closing of deal.
It also expects the deal to add about 2 percent to operating earnings per share in 2019. The deal would add another 7 percent in 2020.

The move comes as the regional bank looks to expand in Chicago. The merger will result in the combined entity having a total Chicago deposit market share of 6.5 percent. That would ranking the company fourth in total deposits among the roughly 200 banks operating in the marketplace. Fifth Third Bank currently operates 1,300 branches and 2,600 ATMs across 12 states.

Fifth Third was counseled on the deal by Citi as financial adviser and Simpson Thacher & Bartlett LLP as legal adviser. Sandler O’Neill + Partners served as financial adviser and Silver Freedman, Taff & Tiernan LLP and Vedder Price were legal counsel to MB Financial. After the announcement of the deal, shares of MB Financial were up 14 percent in early trade, while Fifth Third shares were down 7.2 percent.