TORONTO — Royal Bank of Canada (TSX:RY) has a friendly deal to acquire L.A.-based City National Corp. for US$5.4 billion in cash and common stock in order to grow its wealth management business in the United States.
RBC chief executive Dave McKay says Canada’s largest commercial bank currently has about 340,000 U.S. households as clients of its wealth management arm and City National will enable the bank to offer a broader range of financial products.
The head of City National (NYSE:CYN) will remain with the company and also be responsible for RBC’s wealth management business in the United States.
Under the proposed deal, City National shareholders would get the equivalent of US$93.80 per share — roughly half in cash and half in RBC shares.
City National shares close Wednesday at US$74.57 on the New York Stock Exchange but jumped about 14 per cent after the announcement. They were trading at US$85.18 at 7:15 a.m. ET, about 15 minutes after the deal was announced.
The deal requires various approvals from regulators and City National shareholders.
“We’re very enthused about merging with RBC,” said Russell Goldsmith, who is City National’s chairman and CEO.
“It will deliver significant value to our shareholders along with the opportunity to participate in the future growth of RBC.”