MI-BMO Merger Gets Regulatory Nod - Analyst Blog
22 Junho 2011 - 10:00AM
Zacks
Marshall & Ilsley Corporation (MI) and
Bank of Montreal (BMO) merger deal is right on
track for completion, following the final regulatory approval on
Tuesday. With this regulatory nod, the parties have finally
garnered all necessary approvals required to complete the
merger.
With regard to this, BMO stated that its plan to proceed with
common share offering to finance MI merger has been shelved because
of its strong capital position. The deal is now expected to close
on July 5.
In May, the shareholders of MI approved the merger deal with
BMO. The U.S. Treasury Department also provided a proxy giving
their assent to the merger as it holds the Senior Preferred Stock
of the company.
MI’s merger with BMO, an all-stock transaction valued at $4.1
billion, was announced in December 2010. Under the terms of the
deal, MI’s shareholders will get 0.1257 share of BMO for each share
of the company. The transaction is valued at $7.75 per share or 34%
premium to the closing price of the company’s share on December 16,
2010.
BMO will also acquire MI’s Troubled Asset Relief Program (TARP)
shares worth $1.7 billion and will repay the TARP money before the
closure of the deal. Moreover, BMO would not only assume MI’s
long-term liabilities of $5.4 billion, but also purchase the
company’s remaining warrants that are held by the U.S Treasury
department as part of its participation in the TARP.
Following MI’s merger with BMO, the latter will be able to
extend its reach in the lucrative U.S. market. The deal would also
add 374 branch locations to BMO’s empire, increasing the branch
count to 695 in the U.S.
MI’s inability to move out of its problem assets was taking a
toll on its financial results for the last several quarters. So,
the merger agreement will likely provide some relief to the
investors of MI.
Currently, MI’s shares retain a Zacks # 4 Rank, which translates
into a short-term ‘Sell’ rating, whereas BMO retains a Zacks # 3
Rank, which translates into a short-term ‘Hold’ rating.
BANK MONTREAL (BMO): Free Stock Analysis Report
MARSHALL&ILSLEY (MI): Free Stock Analysis Report
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