Fifth Third Bancorp FITB is set to record a pre-tax gain of around $419 million ( $273 million after tax) during the fourth quarter 2015, stemming from a transaction including sale of a large portion of Vantiv, Inc. VNTV shares and partial cancellation of warrant to purchase Vantiv shares.
As the Ohio-based banking giant is gradually winding down its stake in Vantiv, a secondary offering of 13.4 million shares of Class A Common Stock of Vantiv has been initiated. Also, Fifth Third terminated its right under the existing warrant to buy 4.8 million Class C Units of Vantiv Holding, LLC, the wholly-owned subsidiary of Vantiv for a cash consideration of $200 million.
Fifth Third exercised its right to purchase around 7.8 million Class C units at a strike price of $15.98. The transaction was settled on a net basis for around 5.4 million Class C units. Also, the intricate transaction involved the exchange of these 5.4 million Class C units and 8 million Class B units of Vantiv Holding for the 13.4 million shares of Vantiv Class A Common Stock included in the offering.
Following the deals, Fifth Third will own about 18.3% stake in Vantiv. Fifth Third noted that it may buy back shares of Fifth Third common stock in an amount up to any after-tax gains from the sale of Vantiv Class B units.
Payment processor Vantiv, previously known as Fifth Third Processing Solutions, was spun off from Fifth Third into a separate company in 2009 in an effort to bolster the capital position of Fifth Third. In March 2012, Vantiv went public. Fifth Third retained a minority stake in the Symmes Township-based company, which it will however continue to offload.
Fifth Third currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the banking space include Beneficial Bancorp, Inc. BNCL and Fox Chase Bancorp, Inc. FXCB, each sporting a Zacks Rank #1 (Strong Buy).
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