By Lisa Kerner
Charlotte, N.C., Oct. 24 - PNC Financial Services Group, Inc. announced it will acquire National City Corp. in a stock-for-stock transaction to create the fifth-largest U.S. bank by deposits.
National City shareholders will receive 0.0392 shares of PNC common stock, valued at $2.23 per share, for each share of National City held.
The U.S. Treasury Department approved PNC's participation in the TARP Capital Purchase Program. As a result, the Pittsburgh-based diversified financial services company said it plans to issue to the U.S. Treasury $7.7 billion of preferred stock and related warrants.
An additional $384 million of cash is payable to some warrant holders, according to a PNC news release.
The deal is valued at approximately $5.2 billion in PNC stock.
Both companies' boards of directors have approved the transaction, which is expected to close by Dec. 31, subject to shareholder approval.
National City shareholder Corsair Capital, LLC agreed to vote its 7.8% stake in favor of the deal.
PNC said National City's banking affiliates will be merged into PNC Bank and operate under the PNC Bank name out of Pittsburgh.
The transaction is expected to be accretive to PNC's earnings in the second year.
Also in connection with the transaction, National City, a Cleveland-based financial holding company, issued an option to PNC to acquire 19.9% of National City's common stock that becomes exercisable under specified circumstances, the release said.
"This transaction is about two companies that fit well together in terms of geography, products and services," National City chairman, president and chief executive officer Peter E. Raskind said in the release.
PNC said Raskind will be appointed a PNC vice chairman, and one National City director will join the board of the combined company.
Citigroup Global Markets Inc., JPMorgan Securities, Inc. and Sandler O'Neill + Partners, LP advised PNC. Goldman Sachs acted as financial adviser to National City.
| Acquirer: | PNC Financial Services Group, Inc.
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| Target: | National City Corp.
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| Announcement date: | Oct. 24
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| Price per share: | 0.0392 PNC shares
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| Expected closing: | Fourth quarter of 2008
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| Stock price for acquirer: | NYSE: PNC: $56.88 on Oct. 23
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| Stock price for target: | NYSE: NCC: $2.75 on Oct. 23
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