PNC Financial Services Group has agreed to acquire BBVA USA Bancshares, the US banking business of Spanish banking group Banco Bilbao Vizcaya Argentaria (BBVA), for $11.6bn in an all-cash deal.
BBVA USA Bancshares is the bank holding company for the Texas-based BBVA USA, which has $104bn in assets.
BBVA USA offers commercial and retail banking services and has 637 branches across Texas, Alabama, California, Arizona, Colorado, Florida, and New Mexico.
PNC Financial Services Group is a US-based bank holding company that owns the Pennsylvania-based PNC Bank.
The company said that the deal will significantly speed up its national expansion strategy, while creating the fifth-largest bank in the US on the basis of asset size.
The company plans to merge BBVA USA and PNC Bank, and will convert the former’s customers to its platform. Post-merger, BBVA USA branches will operate under the PNC Bank name.
Enlarged banking company will have a coast-to-coast franchise
The enlarged banking company will have a coast-to-coast franchise with a footprint in 29 of the 30 largest markets in the US, said PNC Financial Services Group.
The deal excludes BBVA Securities, Propel Venture Partners Fund I, and BBVA Processing Services.
PNC Financial Services Group chairman, president and CEO William Demchak said: “Our acquisition of BBVA USA will accelerate our growth trajectory and drive long-term shareholder value through a strategic deployment of the proceeds from the sale of our BlackRock investment.
“This transaction is an opportunity to navigate our future from a position of strength, accelerating PNC’s national expansion strategy while drawing on our experience as a disciplined acquirer.”
Through the transaction, PNC Financial Services Group will add nearly $86bn of deposits and $66bn of loans of BBVA USA, as of 30 September 2020.
According to BBVA, the consideration for the deal is 19.7 times the 2019 earnings of its US subsidiary. Besides, the consideration is nearly 50% of its current market capitalisation, thereby providing significant value for shareholders.
BBVA Group executive chairman Carlos Torres Vila said: “This is a very positive transaction for all sides. PNC has recognized the great value of our unique client franchise and of our great team in the US, who will be part of a leading financial services group in the country.
“The deal enhances our already strong financial position. We will have ample flexibility to profitably deploy capital in our markets strengthening our long-term growth profile and supporting economies in the recovery phase, and to increase distributions to shareholders.”
The transaction, which is subject to regulatory approvals and other customary closing conditions, is expected to be completed in mid-2021.
