Episode summary
Merger Monday for Banks and Biotech | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Scarlet Fu · Guests: Herman Chan, Sam Fazeli, Matthew Palazola
Summary
Regional bank M&A is accelerating, with Huntington Bancshares buying Cadence Bank for $7.4 billion to push deeper into Texas and the Southeast after its Veritex deal. The analyst said Huntington’s appeal is scale in faster-growing markets, noting that the acquisition lifts the bank past the $250 billion asset threshold into super-regional status and should bring tougher regulatory reporting, but not a major capital burden. He also tied the transaction to a broader wave of regional bank consolidation, pointing to more deals likely under a more M&A-friendly policy backdrop.
In biotech, Novartis agreed to buy Avidity Biosciences for $12 billion in a move the analyst said fits its need to replace revenue lost to patent expiration. He argued the deal gives Novartis three late-stage rare-disease assets and exposure to novel technology that could support growth after 2029 and 2030, even if the acquisition is dilutive next year because of IP R&D accounting. He said the size marks a shift from smaller tuck-in deals, but still fits management’s opportunistic approach.
The episode also examined Hurricane Melissa, a category 5 storm threatening Jamaica. The analyst said insured losses should be far smaller than economic losses because insurance penetration is low and much of the exposure is reinsured, while the broader property-and-casualty outlook remains pressured by inflation, regulation and weakening fundamentals rather than by hurricane losses alone.
Key takeaways
- Huntington’s $7.4 billion Cadence Bank deal expands its footprint in Texas and lifts it into super-regional territory above $250 billion in assets.
- The analyst expects more regional-bank M&A as regulators appear more open to deals, with Texas institutions looking especially active.
- Novartis’s $12 billion Avidity purchase is meant to offset looming patent losses and add late-stage rare-disease assets that could help from 2027-2030 onward.
- The analyst said the Novartis deal will be dilutive next year because of IP R&D charges, even if it becomes accretive later.
- Hurricane Melissa may produce much larger economic losses than insured losses in Jamaica because penetration is low and much of the business is reinsured.
Notable quotes
“Texas is really the prize. And Cadence, I believe, has two headquarters, one in Houston and one in Tupelo”
“it will clear the 250 billion asset mark, which is a step up in regulation”
“they talked about improving their return profile, increasing their return on tangible equity by 200 basis points over the medium term”
“They need assets and products to feed it”
“So here there would be dilution next year, but I think they could start seeing some at least a positive contribution maybe from 27 28 onwards”
How the episode opens
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Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. We had an M&A trade.
We had a few M&A trades uh hit the tape here this morning. one including the regional bank business maybe a super regional bank to be Herman Chen Bloomer Intelligence senior analyst for US regional banks Huntington bank shares buying cadence um Herman talk to us about this deal what's going on here so Huntington's fresh off of a deal in Texas they just closed the Veritex deal which added to it basically entered Texas through the Veritex merger and they're doubling down in Texas um adding uh cadence which is in the Houston market primary arily and also some slower growth southeast markets like uh Birmingham, Tupelo. They have some exposure to Arkansas and Missouri, but uh Texas is really the prize.
Texas is really the prize. And Cadence, I believe, has two headquarters, one in Houston and one in Tupelo. So, um Huntington now has presence in 21 states.
And it becomes a super regional. I love that term, super regional. What does that mean in terms of um regular regulation and what kind of capital it needs to hold on its balance sheet?
Yeah. So, that's that's a good question. Uh, it will clear the 250 billion asset mark, which is a step up in regulation.
Uh, really all that means is there's more regulatory reporting. There's tougher um regulation in regards to liquidity, but um overall it shouldn't mean too much uh for for Huntington. And we are expecting some deregulatory efforts from the Fed uh later um down in over the next few months.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- bank mergers
- regional banks acquisitions
- biotech mergers
- pharma m&a
- hurricane impact
Companies and tickers mentioned
- HBAN
- NVS
- RNA
- Huntington Bancshares
- Cadence Bank
- Novartis
- Avidity Biosciences
Watch the episode
Watch “Merger Monday for Banks and Biotech | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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