NEW YORK - PNC Financial the 6th largest bank in the United States by assets may soon be the 5th largest after its purchase of RBC USA. The deal represents a $112 million dollar discounted to tangible book value and a 26% premium to adjusted tangible book value. PNC then lists of series of recent banking transactions showing that PNC paid the lowest price in terms of price to tangible and adjusted tangible book value out of all banking transactions since 2010.
The purchase price of $3.45 billion will be paid with cash, debt and a preferred stock offering. If regulators ask PNC to issue stock the company will pay up to a maximum of 4.9% of the company's common stock and a minimum of 3% or 16 to 26 million shares.
The company will only pay with common stock if regulators ask PNC to raise capital but given its industry leading tier 1 ratio this is unlikely.
PNC says
"The transaction has an estimated internal rate of return to PNC in excess of 19 percent. The
purchase price is currently estimated at approximately 97 percent of RBC Bank (USA) tangible book value, based on its balance sheet as of April 30, 2011, and reflects a negative 0.6 percent deposit premium. "
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