Sandy Spring Bancorp (SASR) shares surged over 5% in pre-market trading on Monday after the company announced that Atlantic Union Bankshares (AUB) has agreed to acquire it in an all-stock deal valued at approximately $1.6 billion.

Under the terms of the merger agreement, each outstanding share of Sandy Spring common stock will be converted into the right to receive 0.900 shares of Atlantic Union common stock. This values the transaction at around $34.93 per Sandy Spring common share based on Atlantic Union's closing stock price on October 18, 2024.

The combined company will create the largest regional bank headquartered in the lower Mid-Atlantic region, with pro forma total assets of $39.2 billion, total deposits of $32.0 billion, and gross loans of $29.8 billion as of September 30, 2024. The deal is expected to significantly enhance the combined company's presence in Northern Virginia and Maryland.

Atlantic Union expects the acquisition to be accretive to its earnings per share, with a tangible book value earn-back period of approximately 3.5 years. The transaction is projected to close by the end of the third quarter of 2025, subject to customary closing conditions, including regulatory approvals and approval by shareholders of both companies.