TORONTO and MILWAUKEE, Dec. 17,
2010 /PRNewswire-FirstCall/ --
- Consistent with BMO's stated objective of expanding its North
American banking business in the U.S.
- Transforms and strengthens BMO's U.S. businesses by increasing
scale and providing strong entry into new and attractive
markets
- Transaction provides attractive financial returns for BMO
- BMO's capital ratios to remain strong
- Customers and communities will benefit from combination of two
organizations with complementary capabilities and a long history of
supporting their interests
BMO Financial Group (TSX NYSE: BMO) and Marshall & Ilsley
Corporation (NYSE: MI) today announced that they have entered into
a definitive agreement under which BMO will acquire all outstanding
shares of common stock of M&I in a stock-for-stock
transaction.
Under the terms of the agreement, each outstanding share of
M&I will be exchanged for 0.1257 shares of Bank of Montreal upon closing. Based on the closing
share price of Bank of Montreal on
the TSX of C$62.05 on December 16, 2010, the transaction values each
share of M&I at US$ 7.75, or an
aggregate amount of approximately US$4.1
billion in Bank of Montreal
common shares. The closing share price of M&I on NYSE on
December 16 was US$5.79.
BMO expects to maintain strong capital ratios after the
acquisition; BMO intends to raise approximately C$800 million in additional common equity prior
to closing of the acquisition. On a Basel II basis, before
considering growth in capital from the business prior to closing,
BMO's Tier 1 Capital Ratio as at October 31,
2010, pro forma for the acquisition and equity offering,
would be approximately 11.7%.
The transaction has an estimated internal rate of return to BMO
of more than 15% and is expected to be accretive to BMO's earnings
in 2013, excluding one-time merger and integration costs of
approximately C$540 million. The
transaction is expected to generate annual run-rate synergies of
approximately C$250 million which
will be fully phased in by the end of fiscal 2013.
As part of the agreement, BMO will purchase M&I's TARP
preferred shares at par plus accrued interest – with full repayment
to the U.S. Treasury immediately prior to closing. M&I's
existing warrants held by the U.S. Treasury will also be purchased
by BMO.
The transaction, which has been approved by the BMO and M&I
Boards of Directors, is expected to close prior to July 31, 2011.
Expanding
Scale
|
|
|
US Assets
$B
|
Deposits
$B
|
No. of
branches
|
|
BMO U.S.
|
110
|
54
|
321
|
|
M&I
|
52
|
38
|
374
|
|
BMO U.S.- M&I
|
162
|
92
|
695
|
|
|
|
|
|
|
|
"The acquisition is consistent with our strategy to strengthen
our North American businesses. It transforms BMO's
competitive position in the U.S. Midwest by bringing together
highly complementary businesses that align well with BMO's retail,
commercial, and asset/wealth management businesses in the U.S. It
also increases scale and provides strong entry into other
attractive markets, including Minnesota, Missouri, and Kansas, and expansion in Indiana and Wisconsin," said Bill
Downe, President and Chief Executive Officer, BMO Financial
Group. "For customers, shareholders and employees, the
combined bank group will be a stronger entity. This acquisition
gives us the opportunity to leverage the greatest strength of both
organizations: our brands and reputations.
"We are very pleased to announce this transaction with M&I.
We are committed to ensuring an excellent transition and to
maintaining M&I's strong presence and community leadership in
Milwaukee and other M&I
markets. Making each M&I customer feel welcome will be a high
priority for us. Harris and M&I set the standard in the
Midwest for exemplary customer experience and commitment to
communities, and we will build upon this reputation," added Mr.
Downe. "We have a brand promise common to each of our
businesses. It speaks directly to customers and reinforces
our focus on personal and commercial banking in North America."
Upon closing, Mark Furlong, who
is currently Chairman, President and CEO of M&I, will become
CEO of the combined U.S. Personal and Commercial banking business,
based in Chicago. He will
report to Mr. Downe and will join BMO's Management Committee.
Also, upon closing, Ellen
Costello will be CEO of Harris Financial Corp. and U.S.
Country Head for BMO with governance oversight for all U.S.
operations. She will report to Mr. Downe and will be a member
of BMO's Management Committee.
Mr. Furlong said: "This transaction is good news for M&I's
shareholders, customers, employees and the communities we serve.
It will position us with the capital strength and scale to
enhance our commitment to customers and communities. This
combination is about two companies that share a vision of building
strong long-term customer relationships. BMO has a diversified
business mix with a strong reputation for being a consistent
lender."
Both companies have proven execution capabilities and have
strong management and deep customer relationships. The
combined U.S. banking operations will bring together the best
people and resources to create a strong team to lead the business
forward. Mr. Furlong, in partnership with Ms. Costello, will
lead the integration effort of merging the companies, with focus on
disciplined execution of the companies' plans. Both companies
have significant experience at completing numerous transactions
successfully.
Under the terms of the merger agreement announced today, M&I
will merge with a BMO subsidiary, and existing M&I shareholders
will become entitled to receive common shares of Bank of
Montreal. In connection with
the merger agreement, M&I issued to BMO an option, exercisable
under certain circumstances, to purchase up to 19.7% of M&I's
common stock. The transaction is subject to customary closing
conditions, including regulatory approvals and approval from
shareholders of M&I.
Investor information and call
A conference call is scheduled to take place on Friday, December 17, 2010, at 8:00 a.m. (ET) and will feature a presentation
followed by a brief question and answer period with analysts.
Interested parties can access this call live on a listen-only basis
via telephone at: (416) 695-7806 or 1 (888) 789-9572, passcode No.
7214261# (please call between 7:45 a.m. and
7:55 a.m. ET) and via the internet at:
www.bmo.com/investorrelations.
Presentation material referenced during the conference call will
be available at www.bmo.com/investorrelations.
A rebroadcast of this presentation will be available until
midnight ET, Thursday, February 17, 2011, by calling 1 (800)
408-3053 or (905) 694-9451 and entering passcode No. 2446165#.
Advisors
BMO Capital Markets and JPMorgan Securities LLC acted as
financial advisers to BMO, and Sullivan and Cromwell LLP and
Osler Hoskin & Harcourt LLP
acted as its legal advisers. BofA Merrill Lynch acted as
financial advisor to M&I. Wachtell, Lipton, Rosen & Katz and Godfrey &
Kahn acted as legal advisors to the Board of Directors of
M&I.
About BMO
Established in 1817 and based in Canada, BMO Financial Group serves more than
10 million personal, commercial, corporate and institutional
customers in North America and
internationally. Our operating groups – Personal and Commercial
Banking, BMO Bank of Montreal in
Canada and Harris in the United States; Private Client Group, our
wealth management business; and BMO Capital Markets – share one
vision: to be the bank that defines great customer experience.
About Marshall & Ilsley
Marshall & Ilsley Corporation (NYSE: MI) is a diversified
financial services corporation headquartered in Milwaukee, Wis., with $51.9 billion in assets. Founded in 1847, M&I
Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 192 offices
throughout the state. In addition, M&I has 53 locations
throughout Arizona; 36 offices
along Florida's west coast and in
central Florida; 33 offices in
Indianapolis and nearby
communities; 26 offices in metropolitan Minneapolis/St. Paul, and one in Duluth, Minn.; 17 offices in the greater
St. Louis area; 15 offices in
Kansas City and nearby
communities; and one office in Las Vegas,
Nev. M&I also provides trust and investment management,
equipment leasing, mortgage banking, asset-based lending, financial
planning, investments, and insurance services from offices
throughout the country and on the Internet (www.mibank.com or
www.micorp.com).
Cautionary statement regarding forward-looking
information
Certain statements in this press release are forward-looking
statements under the United States Private Securities Litigation
Reform Act of 1995 (and are made pursuant to the 'safe harbour'
provisions of such Act) and applicable Canadian securities
legislation. These forward-looking statements include, but are not
limited to, statements with respect to the expected closing of the
proposed acquisition of M&I, plans for the acquired business
and the financial impact of the acquisition and are typically
identified by words such as "believe", "expect", "anticipate",
"intend", "estimate", "plan", "will", "should", "may", "could" and
other similar expressions.
By their nature, forward-looking statements are based on various
assumptions and are subject to inherent risks and uncertainties. We
caution readers of this press release not to place undue reliance
on our forward-looking statements as the assumptions underlying
such statements may not turn out to be correct and a number of
factors could cause actual future results, conditions, actions or
events to differ materially from the targets, expectations,
estimates or intentions expressed in the forward-looking
statements. Such factors include, but are not limited to: the
possibility that the proposed transaction does not close when
expected or at all because required regulatory, shareholder or
other approvals and other conditions to closing are not received or
satisfied on a timely basis or at all; the terms of the proposed
transaction may need to be modified to satisfy such approvals or
conditions; the anticipated benefits from the proposed transaction
such as it being accretive to earnings, expanding our North
American presence and cost savings and synergies are not realized
in the time frame anticipated or at all as a result of changes in
general economic and market conditions, interest and exchange
rates, monetary policy, laws and regulations (including changes to
capital requirements) and their enforcement, and the degree of
competition in the geographic and business areas in which M&I
operates; the ability to promptly and effectively integrate the
businesses of M&I and BMO; reputational risks and the reaction
of M&I's customers to the transaction; diversion of management
time on merger-related issues; increased exposure to exchange rate
fluctuations; and those other factors set out on pages 29 and 30 of
BMO's 2010 Annual Report. A significant amount of M&I's
business involves making loans or otherwise committing resources to
specific companies, industries or geographic areas.
Unforeseen events affecting such borrowers, industries or
geographic areas could have a material adverse effect on the
performance of our integrated U.S. operations.
Assumptions about current and expected capital requirements,
M&I's revenues and expenses, potential for earnings growth as
well as costs associated with the transaction and expected
synergies, were material factors we considered in estimating the
internal rate of return to BMO and our estimate of the acquired
business being accretive to BMO's earnings in 2013.
Assumptions about our integration plan, the efficiency and
duration of integration and the alignment of organizational
responsibilities, were material factors we considered in estimating
transaction and integration costs.
BMO does not undertake to update any forward-looking statement,
whether written or oral, that may be made, from time to time, by
the organization or on its behalf, except as required by law.
Additional information for stockholders
In connection with the proposed merger transaction, BMO will
file with the Securities and Exchange Commission a Registration
Statement on Form F-4 that will include a Proxy Statement of
M&I, and a Prospectus of Bank of Montreal, as well as other relevant documents
concerning the proposed transaction. Shareholders are urged to read
the Registration Statement and the Proxy Statement/Prospectus
regarding the merger when it becomes available and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important
information. A free copy of the Proxy Statement/Prospectus, as well
as other filings containing information about BMO and M&I, may
be obtained at the SEC's Internet site (http://www.sec.gov). You
will also be able to obtain these documents, free of charge, from
BMO at www.BMO.com under the tab "About BMO - Investor Relations"
and then under the heading "Frequently Accessed Documents" or from
M&I by accessing M&I's website at www.MICorp.com under the
tab "Investor Relations" and then under the heading "SEC
Filings."
BMO and M&I and certain of their directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the shareholders of M&I in connection with the
proposed merger. Information about the directors and executive
officers of BMO is set forth in the proxy statement for BMO's 2010
annual meeting of shareholders, as filed with the SEC on Form 6-K
on February 26, 2010. Information
about the directors and executive officers of M&I is set forth
in the proxy statement for M&I's 2010 annual meeting of
shareholders, as filed with the SEC on a Schedule 14A on
March 12, 2010. Additional
information regarding the interests of those participants and other
persons who may be deemed participants in the transaction may be
obtained by reading the Proxy Statement/Prospectus regarding the
proposed merger when it becomes available. Free copies of this
document may be obtained as described in the preceding
paragraph.
SOURCE Marshall & Ilsley Corporation