Updated from May 4
Charter One Financial
rose sharply Wednesday following word that it will be acquired by
Citizens Financial Group
for about $10.5 billion.
In premarket trading, shares of Charter One were up $7.91, or 22%, to $44.01, adding to their Tuesday regular-session gain of 56 cents, or 1.6%. The stock closed Tuesday at $35.95. Shares of
, a company long rumored to be a buyout target of Citizens' parent, were up 49 cents, or 2.3%, to $20.51.
Citizens Financial, a subsidiary of
The Royal Bank of Scotland Group
, will pay $44.50 per share for Charter One in an all-cash transaction expected to close in the fourth quarter of 2004, pending the nod from regulators.
Now ranked among the 20 largest U.S. commercial bank holding companies, Citizens Financial's purchase will propel it into the ranks of the 10 biggest holding companies in the nation, expanding its reach beyond New England and the Mid-Atlantic to the Midwest and Northeast.
After the acquisition, Citizens Financial will gain another $43 billion in assets for a total of nearly $129 billion. It will also add another 8,400 employees, pushing the total to 24,000.
In a prepared statement, Fred Goodwin, CEO of RBS Group, called the move "a highly logical and very natural acquisition for Citizens to make. As well as making good financial sense in its own right, it opens up another interesting range of options for Citizens to maintain their strong growth momentum, and it consolidates Citizens' position as one of the leading banks in the United States."
After the purchase, RBS will derive 25% of its profits from the U.S., he said.
Upon completion of the deal, Charter One CEO Charles John Koch will relinquish his title to become chairman of the Cleveland-based bank and vice chairman of the board of Citizens Financial. He will also serve on the RBS board.