UPDATE 4-Hancock snaps up Whitney Holding for $1.5 bln in stock

Wed Dec 22, 2010 1:21pm EST

* To pay $15.48/shr, 42 pct premium

* Deal to boost Hancock's '12 EPS by 10 pct

* Combined company to have $20 bln in assets

* Hancock sees cost savings of $134 mln pretax by 2013

* Whitney up 31 pct, Hancock down as much as 8 pct (Recasts; adds analyst comments, conference call details, updates shares)

By Sweta Singh

BANGALORE, Dec 22 (Reuters) - Hancock Holding's (HBHC.O) $1.5 billion all-stock takeover of rival Whitney Holding WTNY.O is yet another indication of a pick-up in consolidation among regional lenders still recovering from the credit crisis.

The acquisition, close on the heels of the $4.1 billion takeover of Wisconsin lender Marshall & Ilsley Corp MI.N by Bank of Montreal (BMO.TO), suggests that regional lenders have to aggressively raise their capital levels or look for suitors with deeper pockets to survive. [ID:nN1744360] [ID:nN20192853]

Also, late Tuesday, Massachusetts-based Berkshire Hills Bancorp Inc BHLB.O said it will buy smaller rival Legacy Bancorp Inc LEGC.O for $108 million, offering a 51 percent premium.

Stocks of regional banks rallied following the Whitney deal, triggering a 4 percent rise in the KBW Regional Banks index .KRX. [ID:nN2292846]

"What you are likely to see, particularly after the capital rules, is an acceleration in this type of activity," veteran banking analyst Richard Bove of Rochdale Securities told Reuters.

It makes sense for smaller companies short of capital to find buyers. For buyers, it makes sense to buy these companies as a lot of them are selling or would be selling at a discount to book value, Bove added.

The takeover of loss-making Whitney, saddled with $300 million in bailout funds from the U.S. Treasury and heaps of bad loans, will give Hancock -- the parent company of the century-old Hancock Bank -- a stronghold in the Gulf South region.

The combined company will have about $20 billion in assets and $16 billion in deposits, with operations across Texas, Louisiana, Mississippi, Alabama and Florida.

Branches in Louisiana and Texas will operate under the Whitney Bank name, while those in Mississippi, Alabama and Florida will operate under Hancock Bank name.

Analyst Michael Rose of Raymond James said the deal is a sign of things to come.

"Whitney would have had to raise money to repay TARP and maybe it made sense to partner up to become a better institution," Rose said.

The deal values 128-year-old Whitney's shares at $15.48, a premium of 42 percent to their Tuesday close.

Shareholders of Whitney Holding will receive 0.418 share of Hancock Holding for each share held, the companies said in a statement.

"I think the deal is a major Christmas gift to Whitney shareholders," Keefe Bruyette and Woods analyst Bain Slack said.

Hancock expects to buy back Whitney's preferred stock and warrants issued to the U.S. Treasury under the Troubled Assets Relief Program and raise about $200 million through a common stock offering, following the closure of the deal.

Hancock expects the deal to add 10 percent to its earnings in 2012 and 19 percent in 2013. It sees cost savings of $134 million on a pretax basis by 2013.

The deal is expected to be completed in the second quarter of 2011.

Morgan Stanley acted as financial adviser to Hancock and J.P. Morgan Securities Inc advised Whitney.

Whitney shares were trading up 30 percent at $14.16 on Wednesday afternoon on Nasdaq, having touched a high of $14.30, in heavy trading.

Hancock shares were down 6 percent at $34.97, after falling as much as 8 percent in morning trade. (Additional reporting by Archana Shankar and Jochelle Mendonca in Bangalore; Editing by Gopakumar Warrier, Unnikrishnan Nair)