PNC Financial sells 57 branches to First Niagara
08 Apr 2009
American finance company First Niagara Financial Group Inc., parent of First Niagara Bank, said Tuesday it will acquire $4.2 billion in deposits and 57 branches in western Pennsylvania from National City Bank, a unit of PNC Financial Services Group Inc.
Divestiture of these branches was a regulatory condition of PNC's purchase of National City in December., In addition to $3.2 billion in cash, First Niagara will also receive about $839 million of performing business and consumer loans. The deal is expected to close in September 2009 and add to earnings by about 20 per cent in 2010.
The acquisition will significantly bolster First Niagara's operations. First Niagara had $5.9 billion in deposits and $9.3 billion in assets as of 31 December. First Niagara will add more than 400,000 customer accounts as part of the acquisition.
"This transaction enables us to strategically expand our franchise, leverage our strong financial position and enhance shareholder value," John Koelmel, First Niagara's president and chief executive, said in a statement.
First Niagara said it will retain about 500 employees western Pennsylvania, most of which work in the branches acquired. In addition, First Niagara plans to add 50 to 75 new jobs in and around Pittsburgh to support the new operations. First Niagara said it would add another 100 to 125 jobs in New York to support its new branch network.
Under a separate agreement with PNC Financial and its unit National City, First Niagara has the option of issuing a combination of common stock and debt at closing. As part of the agreement, the aggregate amount of stock and debt should not exceed $150 million, and the number of common shares should not exceed 6.8 million, the company said in a statement.
First Niagara was advised by Goldman Sachs & Co and law firm of Luse Gorman Pomerenk & Schick. PNC Financial was advised by Sandler O'Neill and Partners and law firm Wachtell, Lipton, Rosen & Katz.
First Niagara advanced $1.20, or 11 per cent, to $12.39 at 10:12 a.m. New York time in NASDAQ Stock Market trading. PNC fell $2.21, or 6.5 per cent, to $31.60 in New York Stock Exchange composite trading.