(March 10 – 11:45 ET) – Royal Bank of Canada says it will make a US$115 million cash offer to acquire 100% of Prism Financial Corp., the largest mortgage broker in the U.S.

RBC will offer US$7.50 for the firm, whose three major stockholders, representing more than 60% of outstanding shares, and key members of management have agreed to the deal. The transaction is subject to regulatory approvals.

Chicago-based Prism was founded in 1992 and acts as a mortgage banker and broker. It claims total mortgage originations of nearly US$8 billion in 1999, up 53% from 1998. The firm operates 159 retail branches in 27 states with 2,000 employees.

Prism will operate as a stand-alone business unit under existing management with access to RBC’s U.S.-based Inetrnet bank, Security First Network Bank, and its U.S. discounter, Bull & Bear Securities. RBC expects Prism to grow organically and by acquisition.

“This acquisition will give us a distribution network in the U.S. and continue to strengthen our online presence,” said John Cleghorn, chairman and CEO of RBC. “This deal fits nicely with our strategy of leveraging our Canadian competencies on a niche basis in the United States to create strong North American lines of business… We want to be among the leading North American banks in selected high-growth markets and in selected business lines. Prism, with its mortgage expertise and reputation, is a building block in implementing this strategy. We have every confidence in the track record of Prism’s management team to continue its impressive growth.”

“Royal Bank and Prism share a vision of ambitious growth in the United States,” said Mark Filler, president and CEO of Prism. “We will contribute to Royal Bank’s expansion plans by aggressively pursuing our three-pronged strategy of internal growth, selective acquisitions and Internet alliances. Through the synergies between our two companies, we expect to be an even stronger competitor. Our ability to leverage Royal Bank’s lower cost of capital and array of products will help fuel our growth, particularly in today’s challenging mortgage environment.”
– IE Staff