There are a lot of banks that are so severely challenged from an asset quality perspective, that is compounded by an environment. financial sector deals are likely to pick up in 2011 unless the economy slides back into recession. Jeff Davis, bank analyst at boutique bank Guggenheim Partners, said U.S. Scott Siefers, a managing director at Sandler O'Neill and Partners. This is the first big bank deal we've seen in a while, and it's not a take-under, said R. Shares of Synovus Financial Corp, a Columbus, Georgia-based bank that has not turned a profit since mid 2008, rose 4.4 percent on Friday morning.Įven for certain stressed names out there, there's now the idea of optionality or an exit strategy at a premium. M&I has not turned a profit since the third quarter of 2008, after suffering from an ill-timed foray into areas like Las Vegas and Phoenix.Īccording data from Deutsche Bank analysts, M&I has far more commercial real estate and construction loans on its books than most of its peers, in percentage terms.īank investors saw M&I's sale as a positive sign for troubled banks, indicating that other lenders could sell themselves at a premium. John said the deal seemed like a good one from a strategic point of view, but that with serious integration issues ahead, only time will tell if it truly adds long-term value. BMO has accounted for $4.7 billion in expected future losses on M&I's loan portfolio. The bank owed $1.7 billion to the government under the Troubled Asset Relief Program. It will also buy existing M&I warrants held by the U.S.
#BMO SNAPS JUEGO FULL#
She called the purchase price fully valued.īMO will also purchase M&I's Troubled Asset Relief Program preferred shares at par plus accrued interest, with full repayment to the U.S. The $4 billion is not only a significant premium to the share price of the target, but there is likely to be some further capital that needs to be added to the asset, so that makes it even more pricey, said Juliette John, lead manager of the C$494 million Bissett Dividend Income Fund in Calgary.
Based on BMO's Thursday closing price of C$62.05, that values M&I at $7.75 a share, a 33.9 percent premium on Thursday's New York market close. Under the deal, each M&I share will be exchanged for 0.1257 of a share of BMO. wealth management business.īMO said it should generate annual cost savings of about C$250 million by the end of fiscal 2013. branch network, the deal doubles its customer base in personal and commercial banking, gives it a position in additional U.S. In addition to more than doubling BMO's U.S. M&I has 374 branches and about $52 billion in assets. Milwaukee-based M&I is Wisconsin's biggest bank, and the deal would create the 15th-largest banking group by assets in the United States, BMO said. The United States, with its still-fragile banking sector, is a key target. system and we hope that BMO has been able to identify one of them.Ĭanadian banks emerged from the global financial crisis in much better shape than many rivals and have been seeking growth opportunities abroad. We do believe that there are probably some real deals out in the U.S. We're not rushing out and selling our (BMO) stock, said David Cockfield, who oversees about C$300 million at MacNicol & Associates Asset Management Inc and who said the share dilution was the reason for the steep fall in BMO's stock price. Shares of M&I were up 18 percent at $6.83 in New York. That news drove BMO shares down 6.4 percent to C$58.11 on the Toronto Stock Exchange. It will issue about C$800 million ($792 million) in new shares to help fund the acquisition. Midwest and more than doubles the branch network it runs through its Chicago-based Harris Bank unit. 4 bank said on Friday the deal adds to its position in the U.S.
#BMO SNAPS JUEGO SERIES#
Bank of Montreal will buy troubled Wisconsin lender Marshall & Ilsley Corp for $4.1 billion in an all-stock deal, the biggest in a series of deals in which Canadian banks have snapped up weakened rivals.Ĭanada's No.
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