Port-of-Spain/Toronto -- Oct. 2, 2007 -- Royal Bank of Canada (RY on the
TSX and NYSE) and the RBTT Financial Group (RBTT) today jointly announced
an agreement to combine RBC’s Caribbean retail banking operations with
RBTT’s, through the acquisition of RBTT for a total purchase price of
TT$13.8 billion (approximately US$2.2 billion at exchange rates as of
September 28, 2007).
Under the agreement, RBTT shareholders will
receive per share consideration of TT$40 (approximately US$6.33 as at
September 28 exchange rates) payable in a combination of cash (60%) and
RBC common shares (40%). The number of RBC common shares received by RBTT
shareholders is subject to a plus/minus 10% “collar” based on an RBC share
price of US$54.42 (the average trading price for the five days ending
September 28). Further details about the collar mechanism are available
below.
The RBTT Board of Directors approved the deal and
unanimously recommends that RBTT shareholders vote in favour of the
transaction. The transaction will be mutually beneficial for both
companies. It is expected to close by the middle of 2008 and will be
accretive to RBC’s earnings per share in 2008. RBC’s offer represents an
18% premium on the closing price of RBTT shares on September 28, 2007, and
a 27% premium to the average share price of TT$31.44 over the last 12
months.
The transaction will create one of the most expansive
banking networks in the Caribbean, with a presence in 18 countries and
territories across the region. With more than US$13.7 billion in assets,
the combined operations will have 130 branches across the Caribbean, with
more than 6900 employees serving more than 1.6 million clients. RBC’s
expanded Caribbean retail banking operations will ultimately be
headquartered in Trinidad and Tobago.
“This is a transformational
acquisition for RBC in the Caribbean, one that extends our reach into many
important markets, notably Trinidad and Tobago, Jamaica, and the Dutch
Caribbean,” said Peter Armenio, RBC’s head of U.S. & International
Banking. “RBTT provides RBC with extensive local insight and leadership in
markets where we have little or no presence while significantly advancing
our strategy to grow outside Canada.
“RBTT is a perfect complement
to RBC’s current footprint,” Armenio added. “We both share a history of
serving customers throughout the Caribbean and have almost no overlap of
our respective branch networks.”
"This historic transaction
provides a great opportunity for both companies” said Peter July, RBTT
Group Chairman. “RBC’s financial strength and depth of expertise combined
with RBTT’s market knowledge and position in the region provides the
perfect foundation for us to continue growing and competing effectively
within the Caribbean Basin and beyond.
“RBTT shareholders will
benefit by having the opportunity to improve significantly the liquidity
of their investment and own a portion of the largest bank in Canada and a
leading global financial services institution,” July added.
“The
benefits of this transaction also go well beyond the shareholders and
employees of both companies,” July added. “This transaction sets the stage
for Trinidad and Tobago becoming the financial center of the
Caribbean.”
The headquarters of RBC’s Caribbean retail banking
operations will be located in Port of Spain. “We want our Caribbean
headquarters to be located in what is a key financial center for the
region as well as a logical jumping off place for potential growth outside
the Caribbean,” Armenio said.
Senior management from both
organizations will be integrated. Suresh Sookoo, RBTT Group CEO and Ross
McDonald, RBC’s current head of Caribbean banking, will share
responsibility for leading a smooth transition. Sookoo will become CEO of
RBC’s Caribbean retail banking operations following the successful
integration of the two operations.
“We are excited about the
opportunities the transaction provides clients and employees of both
companies,” McDonald said.
“This deal creates a significantly
larger organization that is better positioned to serve all our customers,
who will benefit from the expanded market coverage, the increased lending
capacity of the combined banks and an expanded range of products,” Sookoo
added.
The acquisition marks RBC’s return to Trinidad and Tobago,
where it had maintained operations from 1902 to 1987. As a consequence of
this proposed transaction, RBC will explore the possibility of issuing
depositary receipts backed by RBC common shares on the Trinidad and Tobago
Stock Exchange. “Making depositary receipts available in Trinidad and
Tobago would further demonstrate our commitment to the region while giving
local investors a chance to invest in the growth of one of the best
performing financial services companies in the world,” Armenio said.
RBTT is RBC’s second international acquisition in the past month
and the ninth acquisition RBC has announced outside Canada in the past 12
months. “We are committed to growing our business outside Canada and we
will continue pursuing suitable opportunities to build on our existing
businesses through organic means as well as acquisitions,” Armenio said.
The deal is subject to closing conditions, including approval by
regulators and RBTT shareholders, and other conditions described in the
information circular to be mailed to RBTT shareholders.
DEFINITION OF COLLAR
MECHANISM
Under the terms of the
agreement, RBTT’s shareholders will receive a fixed amount of cash and a
number of RBC common shares for their RBTT shares. The number of RBC
common shares to be received for each RBTT share will be determined by an
exchange ratio. This exchange ratio will be determined by dividing the
U.S. dollar equivalent of TT$16 by a specified price as follows:
-
If the
average trading price of RBC common shares on the NYSE for the five
consecutive trading days ending on the second trading day prior to the
closing of the transaction is between US$48.98 and US$59.86, then the
specified price for determining the exchange ratio will be that average
RBC trading price.
-
If that
average RBC trading price is equal to or greater than US$59.86, then the
specified price for determining the exchange ratio will be
US$59.86.
-
If that
average RBC trading price is less than or equal to US$48.98, then the
specified price for determining the exchange ratio will be
US$48.98.
A conference call
is scheduled to take place on October 2, 2007, from 10 a.m. to 10:30 a.m.
(EDT) and will feature a presentation by Royal Bank of Canada and RBTT
executives on this announcement. It will be followed by a question and
answer period with analysts. Interested parties can access this call live
on a listen-only basis via telephone at: 416-340-2216 or 1-866-898-9626.
Please call between 9:50 a.m. and 9:55 a.m. (EDT).
A recording of the
conference call will be available after 5:00 p.m. (EDT) on October 2 until
December 28 via telephone at: 416-695-5800 or 1-800-408-3053, passcode
3238335#.
Information related to this announcement will be
available at: www.rbc.com/investorrelations
.
ABOUT
RBTT
RBTT is a
Caribbean-owned banking and financial services group which offers a
complete range of banking and financial intermediation services to
customers in Trinidad & Tobago and the Caribbean.
The RBTT
Financial Group includes ten commercial banks with branches located
throughout the English-speaking Caribbean, Suriname, the Netherlands
Antilles and Aruba. RBTT has led in pioneering a comprehensive range of
innovative and creative financial services for individual clients, private
and public sector companies, governments and international investors.
These include a full range of local and international credit cards,
sophisticated international financing packages, trade promotion services
and interactive trade financing initiatives.
ABOUT RBC
Royal Bank of Canada (RY on TSX and NYSE) and its
subsidiaries operate under the master brand name of RBC. We are Canada’s
largest bank as measured by assets and market capitalization and one of
North America’s leading diversified financial services companies. We
provide personal and commercial banking, wealth management services,
insurance, corporate and investment banking and transaction processing
services on a global basis. Our corporate support team enables business
growth with expert professional advice and state-of-the art processes and
technology. We employ approximately 70,000 full- and part-time employees
who serve more than 15 million personal, business, public sector and
institutional clients throughout offices in North America and 34 countries
around the world. For more information, please visit www.rbc.com
.
Royal Bank
of Canada has a longstanding presence in The Bahamas, with operations
dating back to 1908. Today, it boasts a retail network of 28 branches
throughout New Providence and the Family Islands, a commercial banking
business centre, and 37 automated banking machines.
Royal Bank of
Canada currently operates 46 branches and 68 automated banking machines in
nine Caribbean countries, with more than 1500 employees across the region,
including The Bahamas.
Media Contacts:
RBC
Nassau
Jan Knowles, (242) 356-8796, jan.knowles@rbc.com
Toronto
Beja
Rodeck, (416) 974-5506, Toll-free 1-888-880-2173, beja.rodecjk@rbc.com
RBTT Financial Group
Port of Spain
Paul Charles, (868) 623-1322 ext. 2449, paul.charles@tt.rbtt.com
Investor contacts:
RBC
Marcia
Moffat, (416) 955-7803, marcia.moffat@rbc.com
Amy Cairncross, (416) 955-7809, amy.cairncross@rbc.com
For general investor relations information please
visit: www.rbc.com/investorrelations
RBTT
Paul Charles, (868) 623-1322 Ext. 2449, paul.charles@tt.rbtt.com
Mary Siu Butt, (868) 623-1322 Ext. 2406, mary.siubutt@tt.rbtt.com