Laurentian Bank to acquire Canadian arm of CIT Group

MONTREAL – Laurentian Bank of Canada (TSX:LB) has reached an agreement with New York-based CIT Group Inc. to acquire its Canadian equipment financing and corporate financing activities.

The Montreal-based bank didn’t announce the full purchase price but did say it would pay for part of the acquisition through a $135-million financing, announced separately.

The purchase is scheduled to close in the final quarter of 2016, subject to customary closing conditions.

CIT Canada, based in Burlington, Ont., operates primarily in the equipment and corporate finance sectors. Its portfolio under management is worth about $1 billion.

Once the deal is closed, about 140 employees of CIT Canada will join the bank in a new subsidiary to be called LBC Capital.

Laurentian Bank says it believes the acquisition will boost its adjusted earnings per share by approximately four per cent in 2018.

“By providing a more complete line of products and services, a larger pool of customers and an enhanced sales force deployment, this agreement will contribute directly to achieve our growth agenda,” said Laurentian Bank president and CEO Francois Desjardins.

Laurentian has arranged to raise at least $135 million and up to $155.4 million through a syndicate of underwriters led by TD Securites Inc. The underwriters will pay $47.85 per subscription receipt, which will be exchangeable for one common share of Laurentian plus applicable dividend payments after the transaction closes.