PNC acquires BBVA in $11.6bn deal

February 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

February 2021 Issue

An acquisition which significantly accelerates its national expansion strategy, PNC Financial Services Group, Inc. has acquired the US subsidiary of Spanish financial group Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) in a deal valued at $11.6bn.

Under the terms of the definitive agreement, the Pittsburgh, Pennsylvania-based PNC will acquire BBVA USA Bancshares, Inc., including its US banking subsidiary, BBVA USA, with cash on hand in a fixed price structure.

With $104bn in assets and headquartered in Houston, Texas, BBVA USA Bancshares provides commercial and retail banking services through its banking subsidiary BBVA USA and operates 637 branches in Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico.

When BBVA’s US subsidiaries are combined with PNC’s existing footprint, PNC will have a coast-to-coast franchise, with a presence in 29 of the 30 largest markets in the US, making it the country’s fifth-largest bank by assets.

“Our acquisition of BBVA USA will accelerate our growth trajectory and drive long-term shareholder value through a strategic deployment of the proceeds from the sale of our BlackRock investment,” said William S. Demchak, chairman, president and chief executive of PNC. “We are excited to bring our industry-leading technology and innovative products and services to new markets and clients, leveraging our mutual commitment to building diverse and high performing teams and supporting the communities we serve.”

Upon closing, PNC intends to merge BBVA USA Bancshares into PNC with PNC continuing as the surviving entity. Post-closing, PNC intends to merge BBVA USA into PNC Bank, N.A. and convert BBVA USA customers to the PNC platform with BBVA USA branches assuming the PNC Bank name.

A company with a long history of supporting communities, PNC remains committed to strengthening and enriching lives. This includes its 2020 pledge to provide $30m in charitable support for coronavirus (COVID-19) relief efforts, and a $1bn commitment to support economic empowerment and combat systemic racism of black Americans and low to moderate income communities. PNC also intends to include all new markets in these initiatives, while maintaining its commitment to those it currently serves.

“This is a very positive transaction for all sides,” said Carlos Torres Vila, BBVA group executive chairman. “PNC has recognised the great value of our unique client franchise and of our great team in the US, 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.”

The transaction, which has been approved by both companies’ board of directors, is expected to close in mid-2021, subject to customary closing conditions, including regulatory approvals.

Bank of America, Citi, Evercore and PNC Financial Institutions Advisory acted as financial advisers to PNC and Wachtell, Lipton, Rosen & Katz was legal counsel. J.P. Morgan Securities plc represented BBVA as financial adviser and Sullivan & Cromwell LLP was legal counsel.

Mr Demchak concluded: “The acquisition of BBVA 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.

Fraser Tennant