Royal Bank of Canada (RY) agreed to buy City National Corp. (CYN) for about $5.4 billion in cash and stock in its biggest takeover ever to expand sales to wealthy U.S. residents.
Royal Bank will pay about $93.80 per share for Los Angeles-based City National, or 26 percent more than yesterday’s closing price, the buyer said today in a statement. RBC, Canada’s second-biggest lender by assets, will pay about $47.25 in cash and 0.7489 of a share for each of City National’s shares.
The takeover marks an expansion of U.S. lending under David McKay, who took over as chief executive officer in August. RBC spent more than $4.6 billion over a decade trying to make inroads into U.S. retail banking starting with its 2001 purchase of Centura Bank. The firm cut its losses in March 2012 when it sold its money-losing North Carolina-based RBC Bank and credit-card assets to PNC Financial Services Group Inc. for $3.62 billion.
The City National deal fuels expansion in a “country which we view as our second home market,” McKay said in the statement. “City National serves high-net-worth and commercial-client segments in select high-growth markets, and represents a unique opportunity to complement and enhance our existing U.S. businesses.”
Canadian lenders have been pursuing deals to expand in the U.S. Bank of Montreal agreed to buy Wisconsin’s biggest bank for $4.1 billion in 2010, and Toronto-Dominion Bank purchased Chrysler Financial Corp. for $6.3 billion in 2011.
RBC has 8,000 employees in the U.S, including 3,000 in New York.
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