National Bank Acquires Canadian Western Bank in $5 Billion Deal

National Bank's purchase of Canadian Western Bank for $5 billion solidifies its position in the market, valuing the Edmonton-based lender at approximately $5 billion.

National Bank of Canada has recently announced its plans to acquire Canadian Western Bank in an all-share deal valued at approximately $5 billion. This move is part of National Bank's strategy to expand its geographic reach, particularly in Alberta and British Columbia, where Canadian Western Bank has a strong presence.

The acquisition of Canadian Western Bank will allow National Bank to significantly increase its western footprint and become a stronger national competitor. With Canadian Western Bank's 39 branches and 65,000 clients, National Bank will also expand its lending portfolio by 37% with the addition of $37 billion in commercial-focused loans.

In addition to expanding its full-service offerings, National Bank plans to leverage Canadian Western Bank's digital capabilities to enhance its services for all clients. The deal also includes the provision of wealth-management and risk-advisory services, areas where there is little overlap between the two banks.

The transaction involves the exchange of each Canadian Western Bank share for 0.45 of a common share of National Bank, with a transaction value of $4.7 billion. This represents a 110% premium to Canadian Western Bank's closing price on Tuesday. National Bank expects to achieve $270 million in annual cost savings within three years of the acquisition, with estimated costs of $400 million to carry out the deal.

To finance the acquisition, National Bank has secured a $500 million investment from Caisse de dépôt et placement du Québec, making the Quebec pension fund the second-largest shareholder of National Bank. The acquisition is subject to regulatory approval and must be approved by two-thirds of Canadian Western Bank's shareholders at a meeting scheduled for September. The transaction is expected to close by the end of next year.

Overall, the acquisition of Canadian Western Bank by National Bank of Canada will bring together two complementary banks with growing businesses. The combined entity will offer national scale while maintaining a regionally focused service model, providing enhanced services to clients across Canada.