National Bank of Canada has agreed to acquire financial services institution Canadian Western Bank (CWB) in an all-stock deal that values the latter at about C$5bn ($3.64bn).
Under the terms of the definitive agreement, each share of Canadian Western Bank, excluding those held by National Bank of Canada, will be exchanged for 0.45 of a common share of the latter.
The share exchange ratio will give Canadian Western Bank’s shareholders a pro forma ownership of nearly 10.5% of National Bank of Canada after closing of the deal.
Based in Alberta, Canadian Western Bank is a full-service bank that provides services in business and personal banking, equipment financing, trust services, and wealth management. It holds C$37bn ($27bn) in loans.
The bank has 39 branches spread across Western Canada and Ontario.
Canadian Western Bank CEO Chris Fowler said: “Together, we can offer Canadians more choice by combining CWB’s four-decade legacy of serving business owners and their families with National Bank’s scale, complementary market expertise and the technological capabilities necessary to accelerate our growth.
“Our two organisations share similar values grounded in an unwavering commitment to our clients, a deep history of entrepreneurship and a commitment to giving back in the communities we serve. We’re excited to build on this legacy together.”
Through the transaction, both parties aim to combine two complementary banks with growing businesses and allow the merged entity to deliver better services to customers.
This will be made possible by delivering an extensive product and service platform at national scale with a regionally focused service model.
The deal will also help National Bank of Canada to increase its banking and wealth management activities with a larger network and the joint resources of both banks.
Besides, Canadian Western Bank’s retail customers are expected to benefit from a larger product offering and digital platform while small business clients can leverage National Bank of Canada’s cash and risk management solutions.
The commercial clients of Canadian Western Bank will benefit from the access to National Bank of Canada’s capital markets franchise, said the parties.
Furthermore, Canadian Western Bank will also increase National Bank of Canada’s commercial banking portfolio by nearly 52% by adding domestic earning power and improving loan and revenue diversification.
National Bank of Canada president and CEO Laurent Ferreira said: “This combination will provide customers with access to a broader range of services, expertise and products, along with the benefits of supporting technological investment and innovation.
“When we combine these strengths with our commercial and retail banking offering, leading wealth management and capital markets franchises, we will be able to do more for clients, both existing and new, and unlock significant value creation opportunities.”
Subject to Canadian Western Bank’s shareholders’ and regulatory approvals, the acquisition is anticipated to be completed by the end of next year.
For the transaction, National Bank Financial is serving as lead financial adviser to National Bank of Canada.
For Canadian Western Bank, J.P. Morgan is the exclusive financial adviser while Torys is serving as legal adviser.
To support the acquisition, CDPQ is making a C$500m ($363.7m) investment in National Bank of Canada. This will make CDPQ the second-largest shareholder of National Bank of Canada.
