It’s finally a done deal: CIT Group Inc. in Livingston, N.J. announced Monday it has completed its acquisition of Pasadena’s OneWest Bank for about $3.4 billion in cash and stock.
The deal received approval from regulators on July 21, almost exactly one year after it was first announced – and despite substantial opposition to the deal from several community groups, most notably San Francisco’s California Reinvestment Coalition.
CIT currently specializes in commercial lending and leasing. As part of the deal CIT’s banking unit, CIT Bank, will merge into OneWest’s retail bank, creating by far the largest bank headquartered in Los Angeles county, with more than $65 billion in assets.
Under the terms of the deal, current shareholders in OneWest’s parent company, IMB Holdco, will receive about $1.9 billion in cash and nearly 31 million shares of CIT stock, which currently trades at about $47 a share. They will also receive about 168,000 CIT restricted stock units.
It’s a huge financial win for OneWest’s backers, who include hedge funder managers Steven Mnuchin and George Soros. They formed OneWest out of the wreckage of failed mortgage lender IndyMac Bank and benefited from an agreement with the Federal Deposit Insurance Corp. under which the government agency absorbed much of the losses on the institution’s bad debt.
The investors have already pulled more than $2 billion in dividends from the bank, and stand to reap another windfall as a result of the acquisition by CIT.
CIT also benefited from a financial crisis-era sweetener: it received $2.3 billion as part of the Troubled Asset Relief Program and failed to pay it back before it went bankrupt.
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