National City to acquire Fidelity Bankshares for $1bn

07/28/06 - newratings.com

NEW YORK, July 28 (newratings.com) – The eighth-largest US bank, National City Corp (NCC), Thursday announced that it had agreed to acquire Fidelity Bankshares Inc (FFFL) for $1 billion in a cash and stock deal.

Under the terms of the deal, shareholders may opt to receive either $39.50 in cash or 1.0977 shares of Cleveland-based National City for each share of West Palm Beach-based Fidelity Bankshares, representing a 9.4%-11.7% premium to the latter company's closing price. As part of the deal, the company would acquire 50% of Fidelity Bankshares' outstanding shares through cash and the remaining through the exchange of stock. National City expects to close the acquisition in the first quarter of 2007 and expects the acquisition to be marginally accretive to its earnings in the year.

The deal is part of National City's strategy of gaining retail exposure in the fast-growing Florida market, which has an affluent population. The Fidelity Bankshares deal follows the similar acquisition of Harbor Florida Bancshares, announced on July 11, both of which would provide National City 92 retail branches along Florida's east coast, along with roughly $7.5 billion of new assets.

National City's chairman and chief executive David Daberko said the company expects its total branches in the Harbor and Fidelity market areas to increase to approximately 125 over the next several years.