Pittsburgh-based regional bank PNC Financial Services Group Inc. is bulking up with the $5.2 billion all-stock acquisition of troubled peer National City Corp. Shareholders in both banks initially were none too pleased with the deal, as PNC fell 0.1% to $55.75 in early trading (by 10 a.m. it rebounded and became the only financial stock on Dealscape's Bank Watch list in positive territory), while the bottom fell out from National City, which plummeted 28.7% to $1.96.
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The two banks announced a merger agreement Friday morning where PNC will acquire National City for $2.23 per share, based on the two bank's closing price on Oct. 23, giving an aggregate fixed amount of approximately $5.2 billion. The deal gives National City shareholders 0.0392 share of PNC common stock for each of their National City shares. In addition to the stock, another $384 million of cash will be payable to certain warrant holders.
The acquisition of National City increases PNC's deposit base to $180 billion, catapulting it to the position of fifth-largest U.S. bank by deposits. PNC also said it plans to issue to the U.S. Treasury $7.7 billion in preferred stock and warrants under the TARP Capital Purchase Program. Corsair Capital LLC, which owns 7.8% of National City's common shares, has agreed to vote in favor of the deal.
National City has been slammed by the housing crisis. The Cleveland-based bank posted a fifth-consecutive quarterly loss of $729 million, or $5.86 a share, earlier this week. The bank blamed its skyrocketing losses on an increase in reserves for mortgage and real estate construction loan losses and said it would cut 4,000 jobs to save money. Similar woes afflict its statewide rivals KeyCorp and Fifth Third Bancorp, who announced losses of $36 million and $56 million, respectively. - George White
Come back to Dealscape and TheDeal.com for full coverage through out the day, and see how the entire sector fared in early-morning trading below.
See press release
See Dealscape post on TARP and regional banks
Troubled Wall Street
Prices at close |
| Name |
Price at
open |
Price
at 10 am |
Change |
Mkt cap |
| J.P. Morgan Chase & Co. |
35.19 |
36.77 |
-1.08 |
137038.11 |
| Merrill Lynch & Co. |
15.5 |
16.15 |
-1.36 |
25841.61 |
| Goldman Sachs Group Inc. |
96 |
103.87 |
-4.71 |
41074.54 |
| Morgan Stanley |
15.53 |
16.93 |
-1.15 |
17979.37 |
| Citigroup Inc. |
12 |
12.52 |
-0.59 |
68227.74 |
| Fannie Mae |
0.64 |
0.67 |
-0.04 |
716.78 |
| Freddie Mac |
0.7001 |
0.74 |
-0.06 |
478.40 |
| Bank of America Corp. |
20.49 |
21.74 |
-1.26 |
109070.76 |
| Wachovia Corp. |
5.3 |
5.70 |
-0.06 |
12180.90 |
| Wells Fargo & Co. |
29 |
30.50 |
-0.83 |
101287.20 |
| American International Group Inc. |
1.76 |
1.88 |
-0.22 |
5055.01 |
| Sovereign Bancorp Inc. |
2.11 |
2.34 |
-0.17 |
1553.33 |
| National City Corp. |
1.9 |
2.14 |
-0.61 |
4357.04 |
| Fifth Third Bancorp |
10 |
10.19 |
-1.13 |
5884.59 |
| Capital One Financial Corp. |
32.05 |
35.17 |
-0.54 |
13677.61 |
| SunTrust Banks Inc. |
32.35 |
34.33 |
-1.87 |
12142.14 |
| U.S. Bancorp |
26.55 |
28.64 |
-0.04 |
50234.56 |
| Regions Financial Corp. |
8 |
9.50 |
-0.29 |
6573.58 |
| KeyCorp |
8.28 |
9.71 |
-0.36 |
4804.17 |
| PNC Financial Services |
51 |
58.00 |
1.12 |
20184.00 |
| BB&T Corp. |
28.14 |
30.14 |
-0.07 |
16561.62 |
| Bank of New York Mellon Corp. |
26.38 |
28.50 |
-1.08 |
32705.65 |
| State Street Corp. |
32.94 |
36.97 |
-0.28 |
15954.26 |
Source: The Deal |
