Japan’s MUFG and its core banking subsidiary MUFG Bank have reached a definitive agreement to sell their stake in US consumer banking subsidiary MUFG Union Bank (MUB) held through MUFG Americas Holdings Corporation (MUAH) to U.S. Bancorp (USB) in a deal worth $8bn. MUFG will receive $5.5bn in cash and $2.5bn through 2.9% of USB’s outstanding shares. The deal does not include MUB’s corporate and investment banking operations, as well as its global markets businesses. MUFG plans to continue indirect involvement in the US retail and commercial banking businesses through USB even after the deal. MUFG said, “Both MUFG and USB plan to enter into a Transitional Service Agreement (TSA) and a Reverse Transitional Service Agreement (RTSA) for a certain period of time following the completion of the Share Transfer, and both companies will collaborate to smoothly continue MUB’s current customer transactions by MUB and/or MUFG Bank even after the Transaction, and to provide even higher quality financial services.” After the deal, USB will become the fifth largest bank in the US by total assets and MUFG is expected to record a gain on sale of ~JPY 150bn ($1.37bn) as extraordinary income in FY2022. The deal is subject to regulatory approvals and is expected to be completed by June 2022. MUB has 309 branches and its total assets are worth ~$105.4bn with loans of ~$57.7bn and deposits of ~$89.9bn. Its net income in FY 2020 was ~$593mn. Additional details of the deal as per MUFG’s press release are as follows:
  • The total transaction value of the deal is ~$17.6bn which includes ~$8bn of consideration paid by USB and ~$9.6bn of expected dividend or share repurchase by MUB prior to completion of the share transfer
  • MUB’s consideration paid by USB is ~$8bn and includes MUB’s net assets of $6.25bn and an additional consideration of $1.75bn

MUFG’s 3.637% 2025s and 4.286% 2038s were up 0.11 and 0.4 to trade at 107.87 and 122.66 respectively.

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