Bank of New York Mellon Corp. (BK) announced on Tuesday that it is in the process of buying the global investment servicing unit of PNC Financial Services Group Inc. (PNC) for $2.31 billion.
 
On completion, the deal will help BNY Mellon become the second-largest provider of fund accounting, administration and transfer agency services by adding $855 billion in assets under administration. The transaction will also help PNC partly repay the $7.6 billion in government bailout money it received by participating in the Troubled Asset Relief Program in 2008 to fund the acquisition of National City Corp.
 
The all-cash deal includes the purchase of $1.57 billion of stock and repayment of inter-company debt from PNC. BNY Mellon intends to raise about $800 million in equity to fund the transaction.
 
PNC said that it expects to report an after-tax gain of about $500 million and an increase in its Tier 1 capital level by $1.6 billion.
 
The BNY Mellon Corporation was incorporated on July 1, 2007, following the merger of The Bank of New York Company, Inc. and Mellon Financial Corporation. The company provides various products and services to individuals and institutions in more than 100 markets worldwide.
 
The BNY Mellon Corporation’s businesses benefit from the global growth of financial assets, the globalization of the investment process and the growth and concentration of wealth segments.
 
The BNY Mellon’s fourth-quarter earnings of 59 cents per share came in above the Zacks Consensus Estimate of 52 cents. The company experienced an increase in assets under custody and administration during the quarter.
 
Though BNY Mellon Corporation is well-positioned to benefit from the growth of global financial assets, supported by the increasing levels of savings, the modernization of public pension schemes and growth in cross-border investing, volatility levels in the global capital markets have a greater influence on revenue growth for selected businesses of the company.
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