On Friday, leaders from PNC Financial Services Group (PNC: 61.07, +2.19 (+3.72%)) came to an agreement to acquire National City Corp (NCC: 2.18, +0.11 (+5.31%)) for about $5.2 billion in an all stock deal.  The deal came to a close after the U.S. Treasury invested $7.7 billion in preferred shares of PNC in association with the deal.  An agreement wouldn’t have been reached if the government didn’t step in to provide some type of funding for the deal.
Terms of the Deal

PNC is aware of the bad loans that are still left on National City’s books, but feel they received favorable terms on the deal.  PNC agreed to pay $2.23 a share for National City, which was a 19% discount to their closing price on Thursday.  PNC will pay 0.0392 a share for every National City share plus $384 million in cash to warrant holders.  PNC made its formal offer to National City on Thursday night.  The lenders who were looking at National City included: Bank of Nova Scotia (BNS: 30.29, -0.09 (-0.30%)), US Bancorp (USB: 29.85, +0.40 (+1.36%)), and PNC Financial Services.  US Bancorp and PNC were the final bidders for National City.  Citigroup, J.P. Morgan and Sandler O’Neil advised PNC on the transaction, while Goldman advised National City.  The deal is expected to close by the end of the year.

New Business

The deal doubles PNC’s size and will significantly increase their branch network and deposits.  The deal bumps PNC up to the number 5 spot for banking deposits at $180 billion of deposits.  They are behind banking behemoths Citigroup (C: 12.14, 0.00 (0.00%)), J.P.