M&I Snapped Up in $4.1B Stock Swap Deal

A news release about the $4.1 billion deal said each outstanding share of M&I will be exchanged for 0.1257 shares of Bank of Montreal. Based on the closing share price of Bank of Montreal on the TSX of C$62.05 on Thursday,  the transaction values each share of M&I at US$7.75.The closing share price of M&I on the NYSE on December 16 was US$5.79.

Upon closing, Mark Furlong, who is currently Chairman, President, and CEO of M&I, will become CEO of the combined U.S. Personal and Commercial banking business, based in Chicago. He will report to Bill Downe, President and Chief Executive Officer of the Toronto-based BMO Financial Group and will join BMO’s Management Committee.  Also, on closing, Ellen Costello will be CEO of Harris Financial Corp. and U.S. Country Head for BMO with governance oversight for all U.S. operations, also reporting to Downe and also a member of BMO’s Management Committee.

Under the terms of the merger agreement, M&I will merge with a BMO subsidiary, and existing M&I shareholders will become entitled to receive common shares of Bank of Montreal.  M&I is based in Milwaukee and has $110 billion in assets.

As part of the agreement, BMO will buy M&I’s TARP preferred shares at par plus accrued interest – with full repayment to the U.S. Treasury immediately prior to closing.  M&I’s existing warrants held by the U.S. Treasury will also be purchased by BMO.

The transaction, which has been approved by the BMO and M&I  Boards of Directors, is expected to close prior to July 31, 2011.