U.S. Bancorp to Buy MUFG Union Bank for About $8 Billion
September 21 2021 - 6:52AM
Dow Jones News
By Dave Sebastian
U.S. Bancorp has agreed to buy MUFG Union Bank's core regional
banking franchise from Mitsubishi UFJ Financial Group for about $8
billion in cash and stock, a deal that would boost U.S. Bank's
presence in California and other parts of the West Coast.
The purchase price includes $5.5 billion in cash and about 44
million shares of U.S. Bancorp common stock, the companies said
Tuesday. MUFG will hold a minority stake of about 2.9% in U.S.
Bancorp after the transaction is expected to close in the first
half of 2022, they added.
The companies said they will have a combined presence in
California, Washington and Oregon. Through the deal, U.S. Bank will
gain more than a million consumer customers and about 190,000
small-business customers on the West Coast, in addition to about
$58 billion in loans and $90 billion in deposits based on MUFG
Union Bank's June 30 balance sheet.
U.S. Bancorp, which is the parent of U.S. Bank National
Association, said it expects the transaction to add about 6% to
per-share earnings in 2023. The deal has an estimated internal rate
of return of more than 20%, it said.
The company expects about $900 million in pretax cost savings
equal to 40% of estimated non-interest expenses through a
combination of real-estate consolidation, technology and systems
conversion and other back-office efficiencies. U.S. Bancorp said it
expects to book $1.2 billion in merger charges.
MUFG Union Bank on Sept. 20 entered into a consent order with
the Office of the Comptroller of the Currency, the companies said.
U.S. Bancorp said it has incorporated regulatory concerns into all
aspects of the deal process. It said it expects to remediate issues
applicable to MUFG Union Bank, and that the order won't restrict
U.S. Bancorp's ability to operate and grow its business.
U.S. Bank said it commits to retaining all MUFG Union Bank's
front-line branch employees.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
September 21, 2021 06:37 ET (10:37 GMT)
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