In a move that will make it the nations fifth-largest lender by branches, PNC Financial Services (NYSE:PNC) announced a $3.45 billion deal on Monday to acquire Royal Bank of Canadas (NYSE:RY) U.S. retail bank operations.
The deal, which comes just days after Capital One Financial (NYSE:COF) scooped up INGs U.S. online bank for $9 billion, will give Pittsburgh-based PNC a total of 2,870 branches.
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Headquartered in Raleigh, N.C., RBC Bank has 424 branches in North Carolina, Florida, Alabama, Georgia, Virginia and South Carolina.
The addition of RBC Bank provides PNC a great opportunity to enter attractive southeast markets in a way that will create value for our shareholders," PNC CEO James Rohr said in a statement. "The success of our recent acquisitions demonstrates that when we bring our innovative products and services to new markets we have the proven ability to win clients and take out costs.
PNC said it expects the acquisition will boost its bottom line by the end of 2013 after closing in March 2012.
The $3.45 billion price tag on RBCs U.S. arm represents a $112 million discount to its tangible book value. The deal is expected to add $19 billion of deposits and $16 billion of loans.
Under the terms of the agreement, PNC has the option to give RBC up to $1 billion of the $3.45 billion purchase price in the form of PNC common stock.
PNC said it expects to keep most of RBC Banks customer-facing employees and sees opportunities to add new workers in other areas like wealth management.
After the deal closes, PNC plans to convert RBC Bank customers to the PNC platform and give RBC Bank branches the PNC Bank name.
Shares of PNC slid 0.93% to $57.25 Monday morning, leaving them on pace to extend their 2011 loss of almost 5%. RBCs stock, which was inactive in the premarkets, has gained more than 6% this year.