Capital One Financial Corporation has announced a definitive agreement under which it will acquire ING Direct from ING Groep by the end of 2011 in a stock and cash transaction valued at approximately $9 billion. Currently the eighth largest bank in the United States, based on deposits, Capital One's acquisition of ING Direct combines ING Direct's valuable national direct deposit franchise with Capital One's advantaged access to assets and local scale branch banking. When the deal closes, Capital One will become the fifth largest bank in the United States. The combination strengthens Capital One's customer franchise and brand and provides significant financial and strategic upside with low execution risk.
Under the agreement, Capital One will purchase ING Direct from ING Groep for $6.2 billion in cash and approximately 55.9 million Capital One shares, valued at $2.8 billion, based on a Capital One share price of $50.07, the 10-day average of Capital One closing prices for the period ending June 15, 2011. Capital One expects to finance the cash portion of the consideration, in part, through a public equity raise of approximately $2 billion and debt offerings of approximately $3.7 billion prior to the close of the transaction.
ING is currently one of only a few lenders nationwide offering jumbo loans. As part of the deal, Capital One will also acquire ING Mortgage.
"The acquisition of ING Direct is a game-changing transaction that delivers attractive deal economics immediately and compelling long-term strategic value," said Richard D. Fairbank, chairman and CEO of Capital One. "The combination of Capital One and ING Direct creates a unique and valuable banking franchise that includes advantaged access to assets, great local scale branch banking in attractive markets, and with ING Direct, the leading direct bank customer franchise with national reach. Adding ING Direct enhances and sustains key sources of shareholder value over the long-term, including growth, returns and capital generation."
Capital One will work closely with ING Direct's leadership team to establish a management structure designed to ensure that the combined company achieves the highest quality integration and has the best leadership in place to build on ING Direct's great customer franchise. ING will maintain a 10 percent stake in Capital One and the right to one director on the company's board.
