Royal Bank Of Canada To Buy City National In $5.4 Bln Cash, Stock Deal

(RTTNews) - Canadian financial services provider Royal Bank of Canada (RY, RY.TO) agreed Thursday to acquire U.S. private and commercial bank City National Corp. (CYN) in a cash and stock deal valued at about $93.80 per share or a total of $5.4 billion.

Following the announcement, City National shares are skyrocketing nearly 21 percent in pre-market trading.

Los Angeles-based City National serves high net worth and commercial clients across a number of the largest and most attractive U.S. metropolitan areas, including New York, Los Angeles, the San Francisco Bay Area and Orange County.

The deal will see Toronto, Canada-based Royal Bank pay, on average, about $47.25 in cash and 0.7489 of its common share for each share of City National common stock. City National stockholders will be entitled to elect to receive the merger consideration in common shares or cash, subject to certain adjustments and limitations.

The deal is valued at about $5.4 billion or $93.80 per share, based on Royal Bank's closing stock price of $62.16 on the NYSE on Wednesday. The per share value represents a premium of 25.8 percent over City National's closing stock price of $74.57 on Wednesday.

Royal Bank noted that the aggregate consideration will be paid with about $2.7 billion in cash and about 44 million of its common shares, which is a 50 percent cash and 50 percent share mix.

Following the closure of the deal, Royal Bank will combine its U.S. Wealth Management unit with City National, under the leadership of City National Chairman and CEO Russell Goldsmith, with the combined unit being reported as part of the global RBC Wealth Management segment.

City National's private banking and wealth management capabilities will enable Royal Bank to offer a broader product suite to the 340,000 U.S. households served by its U.S. Wealth Management unit.

Royal Bank said the deal is expected to be accretive to its earnings per share (before amortization of intangibles) in the latter part of year three and accretive to earnings in year two.

The deal is expected to close in the fourth calendar quarter of 2015.

Meanwhile, the Goldsmith family stockholders will receive Royal Bank common shares for the entirety of their stockholdings of about 13 percent, and they have agreed to vote their City National stockholdings in favour of the deal. They have also agreed to hold at least 50 percent of the RBC common shares received by them in the deal until the third anniversary of closing.

RY closed Wednesday's regular trading session at $62.16, down $0.23 on a volume of 1.69 million shares. On the Toronto Stock Exchange, RY.TO closed at C$76.61, up C$1.44 on a volume of 3.30 million shares.