BNP Paribas has announced that it has reached an agreement with the Bank of Montreal (BMO) to sell its American subsidiary Bank of the West, for an amount of $ 16.3 billion.
BNP Paribas announced that it had reached an agreement with the Bank of Montreal (BMO) to sell its American subsidiary Bank of the West, for an amount of $ 16.3 billion, in a press release Monday.
The operation should be carried out “formally during the year 2022, subject to the usual conditions precedent, including the approval of the competent regulatory and competition authorities”, it is specified.
Several media had reported in recent weeks of the search by the French bank for a potential buyer for this subsidiary which it took control in 1979. The Wall Street Journal had announced Sunday that BNP Paribas was in advanced discussions with BMO for him divest Bank of the West.
According to the statement on Monday, the agreement relates to “the sale of 100% of the commercial banking activities in the United States operated by its subsidiary Bank of the West, for a total price consideration of 16.3 billion US dollars, or an amount equivalent to approximately 14.4 billion euros, paid in cash upon completion of the transaction “.
This sum “represents 1.72 times the value of the tangible net assets of Bank of the West, and 20.5% of the market capitalization of BNP Paribas, for an average contribution of Bank of the West to the group’s pre-tax income. in recent years about 5% “, it is specified.
“The operation should generate during its completion an exceptional capital gain (net of tax) estimated at around 2.9 billion euros,” the statement added.
“This operation creates value for all parties; it underlines the quality of Bank of the West”, summarized Jean-Laurent Bonnafé, director general of the group, quoted in the press release.
“In addition, the establishment of BNP Paribas in the United States remains a strategic pillar for the development of our corporate and institutional franchises. With this transaction, BNP Paribas confirms its commitment to create long-term value for the ‘all of its stakeholders,’ he said.
Regarding the financial details of the transaction, BNP Paribas indicates that it plans to make “an extraordinary distribution in the form of share buybacks after the completion of the transaction in order to offset the expected dilution of net earnings per share. As an indication, a share buyback program of around 4 billion euros would completely neutralize the dilution of net earnings per share “.