Spanish banking giant, BBVA announced today that the bank has agreed to sell its US subsidiary to PNC in a cash deal worth $11.6 billion. The subsidiary BBVA USA has 637 branches in the country with over $104 billion in assets under management.
Headquartered in Houston, Texas, BBVA USA Bancshares are operating in Texas, Alabama, Florida, California, and New Mexico. The deal is the second-largest US banking acquisition since 2008. The all-cash deal represents almost 50% of BBVA’s current market capitalization.
According to the official announcement, the deal amount represents 19.7 times the earnings of BBVA US Bancshares in 2019, creating a significant value for the shareholders. Subject to approval, the deal is expected to close in mid-2021.
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Commenting on the deal, Carlos Torres Vila, BBVA Group Executive Chairman, 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 U.S., 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.”
Focus on Expansion
PNC Bank aims to achieve higher growth with the recent acquisition as the deal provides an opportunity for the Pittsburgh-based bank to expand its operations. “Our acquisition of BBVA USA will accelerate our growth trajectory and drive long-term shareholder value through the 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,” William S. Demchak, PNC’s Chairman and CEO, said in a statement.
BBVA shares jumped 15% following the news.