(Updates with underwriters, pricing discounts comparison)
Bank of New York Mellon Corp. (BK) raised $1.2 billion in a
follow-on offering of its common shares, pricing 42 million shares
at $28.75 on Monday night.
The shares, which sold at a 3% discount to the company's closing
price on Monday, begin trading Tuesday after the market opens. The
offering was managed by Goldman Sachs Group Inc. (GS) and Morgan
Stanley (MS).
Bank of New York Mellon was among the banks that passed federal
regulators' stress tests last week and wasn't required to raise
capital for its balance sheet. Instead, the company plans to use
the proceeds to pay off the preferred stock and warrants sold to
the U.S. Treasury Department as part of the government's Troubled
Asset Relief Program, or TARP.
Bank of New York Mellon is not the only bank expected to push
new shares onto the market Tuesday. Also pricing Monday night was a
$2.5 million deal from U.S. Bancorp (USB), which is also using the
money to pay down TARP. U.S. Bancorp's offering sold 139 million
shares at $18 a share, a 3% discount to its Monday close. That
offering was managed by Goldman and Morgan Stanley.
It's notable that both Bank of New York Mellon and U.S.
Bancorp's deals priced close to a 3% discount, a range that is
normal for secondaries. Last week, two other bank follow-on
offerings of stock, for companies that were raising money to
finance stress test obligations, sold at higher discounts. Wells
Fargo & Co. (WFC) sold $7.5 million at an 11% discount, and
Morgan Stanley sold $4 billion of its own shares at a 12% discount.
Both deals were heavily oversubscribed, with Wells Fargo raising
$1.5 billion than expected and Morgan Stanley doubling the size of
its offering.
Also expected to price stock Tuesday is BB&T Corp. (BBT),
which is seeking to raise $1.5 billion in common stock, again to
pay off TARP assets. BB&T's deal, managed by Goldman, JPMorgan
Chase & Co. (JPM) and Morgan Stanley, is set to price Tuesday
evening after the market closes.
-By Lynn Cowan, Dow Jones Newswires; 301-270-0323;
lynn.cowan@dowjones.com
