PNC - BBVA PNC Strike A Win-Win Deal For BBVA's US Operations

• PNC and BBVA announced an agreement wherein PNC will acquire BBVA's U.S. banking operations for $11.6 billion.
• PNC becomes a truly national franchise, adding BBVA USA's seven-state footprint across the Sunbelt and growing its loan base by about 24%.
• BBVA USA has long been less efficient than PNC on metrics like cost/revenue, loans/branch, and income/branch, and PNC stands to reap significant synergy/improvement benefits.
• BBVA is getting a good price for BBVA USA and management has pledged to return at least some of the proceeds to shareholders through a buyback; further M&A is also a possibility.
• This is a good deal for both companies; PNC continues to look like an undervalued high-quality operator, while BBVA is also undervalued but less operationally outstanding.

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