BY Richard Summerfield
U.S. Bancorp, parent of US Bank, has agreed to acquire MUFG Union Bank in a deal worth around $8bn.
Under the terms of the deal, U.S. Bancorp will pay $5.5bn in cash and issue 44 million shares of its common stock, giving the Japanese parent of MUFG Union Bank a 2.9 percent stake in the company. The transaction excludes the purchase of MUFG Union Bank’s Global Corporate & Investment Bank, certain middle- and back-office functions, and other assets.
The transaction has been unanimously approved by the boards of directors of U.S. Bancorp and MUFG, though it is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. The deal is expected to close in the first half of 2022.
“The acquisition of MUFG Union Bank underscores our commitment to strengthen and grow our business on the West Coast, make investments to serve customers and local communities and enhance competition in the financial services industry,” said Andy Cecere, chairman, president and chief executive of U.S. Bancorp. “With MUFG Union Bank, we will increase access to state-of-the-art financial products while maintaining U.S. Bank’s strong track record of putting its customers and communities first.
“We are also committed to maintaining both organizations’ excellent records of serving low-income communities and supporting minority-led institutions,” he continued. “We have a great deal of respect for the MUFG Union Bank team and share customer-centric and relationship-based strategies and cultures based on integrity. We look forward to welcoming MUFG Union Bank to the U.S. Bancorp family.”
“We are very pleased to have reached this agreement which will allow MUFG to focus and increase our resources on accelerating growth in our Americas wholesale businesses – specifically our corporate and investment banking, global markets, Japanese corporate banking and transaction banking businesses,” said Kevin Cronin, MUFG regional executive for the Americas and chief executive of MUFG Americas Holdings Corporation and MUFG Union Bank, N.A.
For U.S. Bancorp, the deal creates a group with combined assets of $665bn and gives it access to MUFG Union Bank’s 300 branches in the US. The bank said it expects to achieve about $900m in pre-tax cost synergies.
There has been a spate of consolidation deals in the US banking sector over the last two years. Driven by the coronavirus (COVID-19) pandemic, dealmaking has gathered pace. In February, M&T Bank agreed to acquire smaller rival People’s United Financial for $7.6bn, while Pittsburgh-based PNC struck a $11.6bn deal last year to buy the US business of Spain’s BBVA.
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