Laurentian Bank has struck a deal with Fairstone and National Bank after having launched an unsuccessful bid to attract a buyer in 2024.Christinne Muschi/The Canadian Press
Laurentian Bank of Canada LB-T has struck a deal to be taken over by Fairstone Bank of Canada in an all-cash deal valued at $1.9-billion and to sell its retail business to National Bank of Canada as part of the lender’s strategy to restructure its beleaguered operations.
Montreal-based Fairstone will combine its commercial lending unit with Laurentian’s in a bid to expand its market share.
Laurentian said it plans to concentrate on commercial real estate lending, inventory and equipment financing, intermediary services and capital markets activities.
The bank launched a plan to overhaul and streamline its business in 2024 after its sale process failed to attract a buyer.
“Joining forces with Fairstone Bank will allow us to grow our specialized commercial business even further,” Laurentian CEO Éric Provost said in a statement.
Fairstone will acquire all common shares of Laurentian at $40.50 per share. The deal is at a premium of 20 per cent over the price of Laurentian Bank shares’ close as of Dec. 1, the banks said.
“We view Québec as a key market and are excited to continue building our presence with the expertise we’re acquiring from Laurentian Bank,” Fairstone chief executive officer Scott Wood said in a statement.
National Bank of Canada will purchase Laurentian’s retail and small-and-medium-sized enterprises banking books, as well as its syndicated loan portfolio.
As of July 31, Laurentian’s retail loans and deposit books were about $3.3-billion and $7.6-billion, respectively. Its small and medium-sized enterprises loans and deposits were about $800-million and $600-million.
“Leveraging our strong presence in Quebec, this transaction aligns with our domestic growth strategy and is a natural fit,” National Bank CEO Laurent Ferreira said.
Laurentian Bank will maintain its brand and head office in Montreal. Mr. Provost will continue in his role and will continue to oversee Laurentian’s turnaround plan.
After the deal closes, Laurentian will shutter its branches in Quebec. The bank has 57 retail locations and more than 2,700 employees – although it is not clear how many of those staff work in branches.
Its employees will not be transferred to National. Instead, Laurentian’s affected staff will be able to apply for open roles at National.
Jefferies analyst John Aiken said the deal allows National to increase scale in its home province without having to manage the issues in Laurentian’s branch system. It is also buying the assets, deposits and mutual funds at book value.
“Laurentian’s elegant exit is National’s gain,” Mr. Aiken said in a note to clients.
Laurentian “faced an uphill climb against its competitors with greater scale, product and service capabilities, and efficiency, and the takeout of the bank was the logical, inevitable conclusion, albeit, much sooner than expected.”
Caisse de dépôt et placement du Québec, which holds about 8 per cent of Laurentian’s shares, said it has agreed to vote in favour of the deal, subject to certain conditions.