Oriental Financial Group Inc. (NYSE: OFG) and Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) today announced the signing of a definitive agreement for Oriental to acquire BBVA’s Puerto Rico operations for $500 million in cash, approximately a 3% premium to tangible book value. Closing of the transaction, which is subject to customary regulatory approvals, is targeted for before year end 2012.
In connection with the acquisition, Oriental announced that it has raised, in a private placement with institutional investors, $84 million of 8.75% non-cumulative convertible perpetual preferred stock, with a conversion price of $11.77, as a first step in raising an estimated $150 million in Tier 1 capital. Oriental intends to use its own excess capital to fund the balance of the purchase price.
“We are very pleased to announce this transaction, which combines two of the healthiest banks on the Island to create a market leading bank that is strongly capitalized, locally controlled and totally focused on serving the needs of Puerto Rico businesses and consumers,” said José Rafael Fernández, President, Chief Executive Officer and Vice Chairman of the Board of Oriental.“At the same time, by acquiring BBVA Puerto Rico, we will achieve our long time goal of transforming Oriental into a bank with a bigger branch network, a larger and more diversified loan portfolio, greater core deposit funding, expanded customer base, and a smaller investment securities portfolio.” “BBVA PR has a strong franchise that is highly complementary to Oriental’s. It also has an experienced, highly capable management team and staff that will fit perfectly with Oriental’s service and advisory oriented culture.” “For Puerto Rico, we believe this transaction further increases the strength of the local banking industry. It is well timed, as the Puerto Rico economy has stabilized and the fiscal situation has continued to improve.”