Meanwhile, Wall Street sources told FOX Business’s Charlie Gasparino that CIT Group CEO John Thain is actively shopping the company in hopes of landing a buyout bid from a larger bank.
The sources said Thain, a former CEO of Merrill Lynch, began shopping CIT after failing to acquire ING Direct, which was bought by Capital One (COF) last year in a $9 billion deal.
An acquisition of New York-based CIT could boost Wells Fargo’s earnings per share by 2% to 7% and would likely carry a premium of around 33%, Stifel Nicolaus analyst Christopher Mutascio said.
“CIT would make a financially attractive acquisition target” for Wells Fargo, allowing the banking giant to scoop up CIT’s tax-sheltering $4 billion of net operating loss carry forwards, the analyst said.
Wells Fargo would likely pay $52 a share, or $10.5 billion, for CIT, Mutascio said.
Shares of CIT jumped 4.8% to $40.80 Monday afternoon, leaving them up 28% over the past year.
CIT collapsed under the weight of the financial crisis, filing for a massive bankruptcy in 2009.
Today, CIT is a public company once again, employing more than 3,500 people.
CIT would benefit from Wells Fargo’s extremely low cost of funds, which is nearly four percentage points less than CIT’s core debt funding, Mutascio said.