On Thursday, Renasant Corporation (NASDAQ:RNST) announced that it has signed a definitive merger agreement with Merchants & Farmers Bank parent First M&F Corporation (UNKNOWN:FMFC.DL).

Assuming regulators do not object, and the merger proceeds to completion by the end of Q3 2013, as planned, the combined company (to be called Renasant) will hold $5.8 billion in assets, making it the fourth largest bank by deposits in the state of Mississippi.

Pursuant to the merger terms, Renasant will issue M&F shareholders 0.6425 of its own shares in exchange for each one M&F share that they own. By Renasant's calculation, this makes the purchase price for M&F $118.8 million, or 119% of tangible book value. This is compared to Renasant's own shares, which are currently valued at 1.6x tangible book  by the market -- suggesting Renasant is getting a very good deal, indeed.

Investors, however, are not so sure, and currently have sold off Renasant shares by more than 2.1%, to $19.02. (M&F shareholders, in contrast, are ebullient, bidding the stock up 39% on today's news).