PNC Financial Acquires Mercantile Bankshares for $6 Billion
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PNC Financial Services Group Inc. (PNC), one of the nation's biggest regional banking companies, is buying the Mid-Atlantic region banker Mercantile Bankshares (MRBK) for about $6 billion in cash and stock.
Pittsburgh-based PNC said Monday the deal will significantly expand its presence in the Baltimore and Washington, D.C., areas. PNC got a foothold last year in the attractive District of Columbia market with its $643 million acquisition of Riggs Bank, which was headquartered in the nation's capital.
Based on PNC's closing stock price of $73.60 on Friday, the deal values shares of Baltimore-based Mercantile at $47.24 apiece, a 28.4 percent premium over their closing price of $36.78 on Friday.
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Mercantile Bankshares shares rose $7.63, or 21 percent, to $44.41 in morning trading on the Nasdaq Stock Market. PNC shares fell $4.63, or 6.3 percent, to $68.97 in morning trading on the New York Stock Exchange.
Mercantile shareholders will receive a combination of 52.5 million shares of PNC stock and $2.13 billion in cash. Under the deal, each Mercantile share will be exchanged for 0.4184 shares of PNC stock and $16.45 in cash.
PNC expects the deal, which is expected to close during the first quarter of 2007, to add to earnings per share in 2008.
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Two Mercantile directors will join the board of the combined company. Mercantile Chairman, President and Chief Executive Edward J. Kelly III will be named a PNC vice chairman when the deal is completed.
PNC has $94.9 billion in assets and more than 2.5 million consumer and small business customers in Pennsylvania, New Jersey, Maryland, Virginia, Delaware, Ohio, Kentucky, Indiana and the District of Columbia.
Mercantile has $17 billion in assets offering services through 240 offices in Maryland, Virginia, the District of Columbia, Delaware and southeastern Pennsylvania.
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PNC said the deal for Mercantile should make PNC a top-10 U.S. bank holding company by market capitalization and the 11th largest U.S. bank by deposits.
It said the deal should enable it to cut more than $100 million of operating expenses through the elimination of operational and administrative redundancies.