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Investor Alert

Sept. 21, 2021, 6:16 a.m. EDT

U.S. Bancorp to buy MUFG Union Bank's regional franchise for $8 billion in cash and stock from Mitsubishi UFJ

Shares of Mitsubishi UFJ Financial Group Inc. (NYS:MUFG) rallied 4.6% in premarket trading Tuesday, after U.S. Bancorp (NYS:USB) announced an agreement to buy MUFG Union Bank's regional banking franchise from Mitsubishi UFJ in a cash and stock deal valued at $8 billion. U.S. Bancorp shares were indicated up nearly 1% ahead of the open. Under terms of the deal, U.S. Bancorp will pay $5.5 billion in cash and issue 44 million shares of its common stock. After the deal closes, which is expected to occur in the first half of 2022, Mitsubishi UFJ will own a 2.9% stake in U.S. Bancorp. The deal excludes MUFG Union Bank's corporate and investment bank, certain middle and back office functions and some other assets. With the deal, U.S. Bancorp gaine more than 1 million consumer customers and about 190,000 small business owners on the West Coast, as well as about $58 billion in loans and $90 billion in deposits. U.S. Bancorp expects to achieve about $900 million in synergies with the deal, while incurring merger charges of $1.2 billion. U.S. Bancorp's stock has rallied 19.5% year to date through Monday and Mitsubishi UFJ shares have climbed 28.9%, while the SPDR Financial Select Sector ETF (PSE:XLF) has advanced 24.0% and the S&P 500 (S&P:SPX) has gained 16.0%.

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