"Attractive financial results." "Long-term strategic value." "Seven million young, high-income, loyal customers."
Those were the reasons, according to a company statement, why Capital One Financial Corp. agreed this week to pay $9 billion in stock and cash to buy online bank ING Direct.
The purchase price will consist of $6.2 billion in cash and approximately 56 million shares of Capital One stock worth $2.8 billion, based on a share price of $50.07, the average of closing prices for the 10-day period ended June 15, 2011.
The deal will vault Capital One up the ranks from the eighth to the fifth largest U.S. bank, based on deposits, according to the company.
Capital One CEO Richard D. Fairbank described the acquisition as a "game-changing transaction" that will create "a unique and valuable banking franchise."
The company plans to save $90 million by consolidating systems, platforms and corporate staff functions and another $200 million annually by "optimizing management" of its deposit portfolio.
Customers of both banks can expect cross-selling campaigns that will promote each bank's products and services to the other's customers.
The transaction is subject to regulatory approvals in both the U.S. and the Netherlands, where ING Direct parent company ING Groep is located, and is expected to close in late 2011 or early in 2012, according to the Capital One statement.
Capital One Financial Corp. is a financial holding company. Capital One Bank, based in McLean, Va., has approximately 1,000 branches, most of which are located in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and Washington, D.C.
In lieu of traditional branches, ING Direct offers banking services online and by telephone and U.S. mail. The bank also has seven cafes that offer Internet access, coffee and financial advice in Chicago, Honolulu, Los Angeles, New York City, Philadelphia, St. Cloud, Minn., and Wilmington, Del., where the company is headquartered.
So far, no hint of the deal has been posted on ING Direct's website.
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