BMO beefs up U.S. presence

BMO Financial Group has announced a massive expansion of its U.S. presence with the $4.1 billion (U.S.) purchase of Milwaukee-based Marshall & Ilsley Corporation, a diversified financial services company.

“The acquisition is consistent with our strategy to strengthen our North American businesses. It transforms BMO’s competitive position in the U.S. Midwest by bringing together highly complementary businesses that align well with BMO’s retail, commercial, and asset/wealth management businesses in the U.S.,” said Bill Downe, President and Chief Executive Officer, BMO Financial Group. “It also increases scale and provides strong entry into other attractive markets, including Minnesota, Missouri, and Kansas, and expansion in Indiana and Wisconsin.”

Prior to the deal, BMO U.S. had $110 billion in assets, with $54 billion in deposits. The deal brings in an additional $52 billion in assets and $38 billion in deposits. The number of BMO branches will more than double, from 321 to 695.

Mark Furlong, currently chairman, president and CEO of M&I, will become CEO of the combined U.S. personal and commercial banking business, based in Chicago.

Ellen Costello will be CEO of Harris Financial Corp. and U.S. country head for BMO with governance oversight for all U.S. operations.

The transaction, which has been approved by both parties’ boards, is expected to close prior to July 31, 2011.

As part of the agreement, BMO will purchase M&I’s TARP preferred shares at par plus accrued interest – with full repayment to the U.S. Treasury immediately prior to closing.

BMO plans to raise C$800 million in additional common equity prior to closing of the acquisition.