- Scotiabank (TSX:BNS; NYSE:BNS) announced it will acquire a 14.9 per cent ownership stake in U.S. bank KeyCorp (NYSE:KEY) for US$2.8 billion.
- An initial investment of 4.9 per cent is expected to close in the fourth quarter of fiscal 2024, and an additional investment of about 10 per cent is expected to close in fiscal 2025.
- KeyCorp operates across 15 states, with US$187 billion in assets and approximately 1,000 branches.
- Shares of Bank of Nova Scotia were down 3.08 per cent, trading at C$61.71 at 09:52 am ET Friday.
Scotiabank (TSX:BNS; NYSE:BNS) announced Monday that it will acquire a 14.9 per cent ownership stake in U.S. bank KeyCorp (NYSE:KEY) for US$2.8 billion.
The agreement calls for an issuance of common shares at a price of US$17.17 per share, representing an 11 per cent premium to the volume weighted average price for the past 20 trading days, according to Bank of Nova Scotia’s news release.
KeyCorp is a U.S. based financial services company operating across 15 states, with US$187 billion in assets and approximately 1,000 branches offering commercial and retail banking and investment advice and services.
“This strategic investment in KeyCorp, a premier bank in the U.S., significantly increases the capital deployed to our identified priority markets,” Scott Thomson, president and CEO of Scotiabank, said in a statement. “We believe that this transaction provides attractive near-term returns to our shareholders and creates future optionality for Scotiabank in the North American corridor, given our unique position as the only Canadian bank with a presence across Canada, the U.S. and Mexico. We look forward to exploring mutually beneficial strategic opportunities in the future.”
Two stages – an initial investment of 4.9 per cent and an additional investment of approximately 10 per cent – will take place to complete the investment that will result in a total pro forma ownership of approximately 14.9 per cent. According to the Bank of Nova Scotia, the investment is expected to be accretive to earnings per share in the first full year after closing of the additional investment.
The initial investment of 4.9 per cent is expected to close in the fourth quarter of fiscal 2024, and the additional investment of approximately 10 per cent is expected to close in fiscal 2025, subject to clearances and regulatory approvals.
Upon completion of the final 10 per cent investment, Scotiabank will have the right to designate two individuals to serve on KeyCorp’s board of directors; one senior officer of Scotiabank and one third party director designated by Scotiabank and reasonably acceptable to KeyCorp.
Scotiabank has assets of approximately C$1.4 trillion and is one of Canada’s Big Six banks. It is one of the top 10 foreign banking organizations in the United States with its global banking and markets business.
KeyCorp has headquarters in Cleveland, Ohio, and operates a complementary and attractive U.S. business focused on commercial clients. Key is one of the nation’s largest bank-based financial services companies, with assets of approximately US$187 billion at June 30, 2024.
Shares of Bank of Nova Scotia (TSX:BNS) were down 3.08 per cent, trading at C$61.71 at 09:52 am ET Monday. The stock is down 1.29 per cent this year.
Shares of KeyCorp (NYSE:KEY) were up 13.45 per cent, trading at US$16.58 at 10:33 am Monday. The stock is up 1.46 per cent this year.
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