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Tuesday, February 02, 2010

PNC and BNY Mellon Seal the Deal

Reported by InvestmentWires Staff, 

Bank of New York Mellon is purchasing PNC Global Investment Servicing (formerly known as PFPC) for $2.31 billion in an all-cash transaction. The deal, unveiled Tuesday morning, is expected to close in the third quarter. The purchase price works out to about 2.85 times PNC Global Investment Servicing's 2009 revenue of $810 million.

Tim Keaney
BNY Mellon
Head of Asset Servicing
The MFWire first reported two weeks ago that PNC GIS was on the block and that BNY Mellon was one of the bidders.

With the purchase, BNY Mellon becomes the No. 2 provider in fund accounting, administration and transfer agency. It adds $855 billion in assets under administration, including $460 billion in assets under custody, and doubles the number of funds serviced for accounting and administration.

Citigroup Global Markets Inc. and Morgan Stanley & Co. Incorporated acted as PNC's financial advisers and Wachtell, Lipton, Rosen & Katz acted as legal adviser. Goldman Sachs was BNY Mellon's investment banker and Reed Smith was the legal adviser.

The price tag includes the purchase of $1.57 billion of stock and repayment of intercompany debt from PNC. BNY Mellon plans to raise approximately $800 million in equity as part of the transaction.

Jim Palermo
BNY Mellon
Head of Asset Servicing
Stephen Wynne, CEO of PNC GIS, will remain in that role. He will report to Tim Keaney and Jim Palermo, co-heads of BNY Mellon Asset Servicing. Based in Wilmington, Delaware, PNC GIS has about 4,500 employees.

"The business will continue to be run out of Wilmington," a BNY Mellon spokesperson told The MFWire. "There are no immediate plans to relocate the business."

As for branding, "a decision on branding will be communicated after the close."

"The sale of PNC Global Investment Servicing is consistent with our focus on disciplined capital management," said PNC Financial chairman and CEO James E. Rohr in a news release. "Given the changing competitive landscape in the investment servicing industry, we believe this is the proper time to sell the business to capture the full value of PNC Global Investment Servicing. The capital generated from this transaction will position PNC with further flexibility."  

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