National Bank of Canada (NA) is buying Canadian Western Bank (CWB) for $5 billion in stock.
The acquisition will merge two of the country’s largest regional banks.
Under terms of the deal, Montreal-based National Bank will pay $52.24 per share for Western Bank, a 110% premium to the current share price.
The deal must be approved by two-thirds of Canadian Western Bank’s stockholders and federal regulators in Ottawa.
In a joint news release, the two banks said that they expect the deal to close by the end of 2025.
Although it is Canada’s sixth-largest lender, National Bank currently operates primarily in Quebec. The acquisition of Western Bank will enable it to branch out to other regions.
National Bank said in the news release that it expects to achieve more than $250 million in cost savings and synergies through the acquisition.
Canadian Western Bank has 39 branches and 65,000 customers, mostly in Alberta and British Columbia. The bank has a small presence in Ontario.
Growing loan losses have weighed on Canadian Western Bank’s earnings in recent years, sending its stock lower.
Over the last 12 months, the stock of National Bank of Canada has risen 21% to trade at $116.34 per share.
Canadian Western Bank’s stock has increased only 1% over the past year and currently trades at $24.89 a share.
