PNC Financial Services (NYSE:PNC) has agreed to acquire the U.S. banking arm of the Spanish lender Banco Bilbao Vizcaya Argentaria SA (NYSE: BBVA) in an all-cash deal valued at $11.6 billion, the company announced Monday.
The deal will create the fifth largest bank in the U.S. with more than $560 billion in assets and a presence in 29 of the top 30 metropolitan statistical areas.
The purchase price values BBVA's U.S. banking franchise at 134% tangible book value, and is expected to be 21% accretive to PNC's earnings by 2022. PNC believes it can cut 35% of BBVA's U.S. expense base by 2022.
The U.S. banking arm of BBVA will give PNC $104 billion in assets, $86.4 billion in deposits, $66.2 billion in loans, and a network composed of 637 branches, largely in Texas, Florida, Arizona, Alabama, and Colorado.
"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," CEO Bill Demchak said in a statement.
Earlier this year, PNC sold a roughly $14 billion stake in the asset management firm BlackRock (NYSE:BLK) in order to build capital if a big acquisition came along during the pandemic while bank valuations are lower.
BBVA began building a presence in the U.S. in the early 2000s, but things have not exactly panned out for the U.S. banking division. BBVA has written down the value of its goodwill several times in the last few years.
The acquisition is expected to close in the middle of 2021. Shares of BBVA jumped 19% in pre-market trading, while shares of PNC were up 4% .