The roughly $763 billion asset Bank of Montreal (NYSE: BMO) recently announced that it plans to pay $16.3 billion in a blockbuster acquisition of the Bank of the West, which is the U.S. banking operation of the French bank BNP Paribas .
The acquisition comes with $105 billion in assets and will grow Bank of Montreal's (BMO's) U.S. banking operations to $424 billion in assets, making the Canadian bank the eighth-largest banking operation in the U.S. and the fourth-largest commercial bank in North America. Will this big move benefit shareholders? Let's take a look.
It's certainly easy to see why BMO is doing this deal. The U.S. footprint is a meaningful part of BMO's operations, and the acquisition of Bank of the West doubles its presence in the U.S. The pro forma bank will have 3.8 million customers and a physical presence in 32 states. Management is most excited about the fact that the acquisition gives BMO immediate scale in California, with a 5% deposit market share in San Francisco and a 2% deposit market share in both Los Angeles and San Jose.
For further details see:
Big Bank Acquisition: Is Bank of Montreal a Buy?