PITTSBURGH -- PNC Financial Services Group Inc., one of the nation's largest regional banks, said yesterday it is buying Baltimore-based Mercantile Bankshares Corp. for about $6 billion as part of an expansion plan targeting wealthy, fast-growing markets.
The Pittsburgh company said the cash-and-stock deal will further its growth along the affluent New Jersey-to-Washington corridor, adding hundreds of new branches in Maryland, the District of Columbia, Virginia, and Delaware.
``I think it's fairly self-evident that the combination of Mercantile and PNC will be a Mid-Atlantic powerhouse," said James E. Rohr, PNC's chairman and chief executive.
The regional footprints of the two banks fit well together, he told analysts during a conference call. ``With their 240 branches, PNC will have market coverage of the wealthy East Coast corridor from the Hudson River to the Potomac," Rohr said.
The transaction will make PNC the second-largest bank by deposit market share in Maryland and Delaware and is expected to accelerate growth in Washington and Delaware, according to Rohr.
Last year, PNC got a foothold in the attractive Washington market with its $643 million acquisition of Riggs Bank, which was headquartered in the nation's capital.
Based on PNC's closing stock price of $73.60 on Friday, the deal values shares of Mercantile at $47.24 apiece, a 28.4 percent premium over their closing price of $36.78 on Friday.
Mercantile Bankshares shares rose $8.16, or 22.2 percent, to $44.94 in trading on the Nasdaq Stock Market. PNC shares fell $3.20, or 4.35 percent, to $70.40 in trading on the New York Stock Exchange.
Mercantile shareholders will receive a combination of 52.5 million shares of PNC stock and $2.13 billion in cash.
Under the deal, each Mercantile share will be exchanged for 0.4184 shares of PNC stock and $16.45 in cash.
PNC expects the deal, due to close in the first quarter of 2007, to add to earnings per share in 2008.