By Lisa Kerner
Charlotte, N.C., July 19 - The PNC Financial Services Group, Inc. signed a definitive agreement to acquire Sterling Financial Corp. in a stock and cash transaction valued at $565 million, or about $19.00 per share. Both companies' boards of directors have approved the deal.
The agreement calls for Sterling shareholders to receive 0.1543 of a share of PNC common stock and $7.60 in cash per share of Sterling common stock. Sterling shareholders can elect to receive consideration in shares of PNC common stock or in cash, subject to proration if either cash or stock is oversubscribed.
Total consideration for the Sterling stock is approximately 4.540 million shares of PNC common stock and $224 million in cash.
The acquisition is expected to close in the first quarter of 2008, with conversion planned for the third quarter of 2008.
PNC expects to take a one-time after-tax charge of $28 million related to the transaction's closing, and the company expects to continue its current common stock repurchase program for 2007.
"The transaction meets PNC's disciplined guidelines for the deployment of capital, and we expect it to be accretive to earnings in 2009 with a 15% internal rate of return," PNC president Joseph C. Guyaux said in a company news release.
Sterling is a diversified financial services company based in Lancaster, Pa.
PNC, a retail and business banking company, is based in Pittsburgh.
| Acquirer: | The PNC Financial Services Group, Inc.
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| Target: | Sterling Financial Corp.
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| Transaction total: | $565 million
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| Price per share: | $19.00 per share; 0.1543 of a PNC share and $7.60 in cash
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| Announcement date: | July 19
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| Expected closing: | First quarter of 2008
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| Stock price for acquirer: | NYSE: PNC: $73.21 on July 18
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| Stock price for target: | Nasdaq: SLFI: $10.55 on July 18
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