(January 26 – 09:50 ET) – Royal Bank of Canada is back on the acquisition trail in the United States, acquiring North Carolina-based Centura Banks Inc. in an all-stock deal.

Each share of Centura will be exchanged for 1.684 shares of Royal Bank upon closing, pegging the deal at about US$2.3 billion, or $3.5 billion in Canadian dollars, based on Royal’s closing share price on the TSE yesterday.

Centura has granted Royal Bank an option to purchase 19.9% of its outstanding common stock under limited circumstances.

Centura is based in Rocky Mount, N.C. It has US$11.5 billion in assets and 3,600 employees. The financial services company offers a complete line of banking, investment, insurance, leasing and asset management services to individuals and businesses in North Carolina, South Carolina and Virginia.

The bank has client relationships with over 420,000 households and 650,000 customers. It will no doubt be brought into Royal Bank’s cross-selling strategy in the U.S. between its insurance, brokerage and Internet banking subsidiaries.

The deal is subject to regulatory approval in Canada and the U.S., approval from the shareholders of Centura Banks, Inc. and other customary closing conditions. It should be completed by mid-summer, at which time Centura will become known as RBC Centura Banks Inc.

“Centura has an experienced management team, strong customer and community orientation and a corporate culture similar to ours,” said John Cleghorn, chairman and CEO of Royal Bank. “The transaction is consistent with our U.S. growth strategy, which is based on focused and manageable acquisitions.

“Centura’s approach to developing and maintaining customer relationships while building size through acquisitions has successfully driven its own growth strategy. We want to preserve and build on their success as we grow our personal and commercial banking platform in the U.S,” Cleghorn added.

Cecil Sewell, Jr., Centura’s CEO said, “Royal Bank of Canada has a stellar reputation and a corporate culture very similar to our own. They offer us the best opportunity to preserve and strengthen this culture while realizing our full potential of offering financial solutions that make a positive difference in the lives of our customers.”

Assuming the deal goes through, Sewell will become chairman of RBC Centura, and likely become a member of the board of directors of Royal Bank. Kel Landis, currently president of Centura Bank, will become CEO of RBC Centura.
-IE Staff