Deal creates new Caribbean banking leader
PORT OF SPAIN, Trinidad and Tobago and TORONTO, Oct. 2 /CNW/ - 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,"
"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
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 followed by the number sign.
Information related to this announcement will be available at:
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.
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
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 and territories, with more than
1500 employees across the region, including The Bahamas.
Safe Harbor Regarding Forward-Looking Statements
Certain statements contained in this press release may be deemed to be
forward-looking statements under certain securities laws, including the "safe
harbor" provisions of the United States Private Securities Litigation Reform
Act of 1995 and in any applicable Canadian securities legislation, and Royal
Bank of Canada (RBC) and RBTT Financial Holdings Ltd. (RBTT) intend that such
forward-looking statements be subject to the safe-harbor created thereby. The
words "may," "could," "should," "would," "suspect," "outlook," "believe,"
"plan," "strategy," "opportunity" "anticipate," "estimate," "expect,"
"intend," "forecast," "objective" and words and expressions of similar import
are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve numerous
assumptions, and inherent risks and uncertainties, both general and specific,
and risks exist that predictions, forecasts, projections and other
forward-looking statements, including statements about the acquisition of RBTT
by RBC, and the potential issuance of the deposit receipts, will not be
achieved. We caution readers not to place undue reliance on these statements
as a number of important factors could cause our actual results to differ
materially from the beliefs, plans, objectives, expectations, anticipations,
estimates and intentions expressed in such forward-looking statements. These
factors include, but are not limited to the possibility that the proposed
acquisition does not close when expected or at all because required
regulatory, shareholder or other approvals are not received or other
conditions to the closing are not satisfied on a timely basis or at all, that
RBC and RBTT may be required to modify the terms and conditions of the
proposed transaction to achieve regulatory or shareholder approval, or that
the anticipated benefits of the transaction are not realized as a result of
such things as the strength of the economy and competitive factors in the
areas where RBTT does business; the impact of changes in the laws and
regulations regulating financial services and enforcement thereof (including
banking, insurance and securities); judicial judgments and legal proceedings;
RBC's ability to complete the acquisition of RBTT and to integrate it with RBC
successfully; reputational risks, and other factors that may affect future
results of RBC and RBTT, including changes in trade policies, timely
development and introduction of new products and services, changes in tax
laws, and technological and regulatory changes. We caution that the foregoing
list of important factors is not exhaustive.
Royal Bank of Canada and RBTT assume no obligation to update the
forward-looking statements contained in this press release.
/NOTE TO PHOTO EDITORS: A photo accompanying this release is available on
the CNW Photo Network and archived at http://photos.newswire.ca.
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For further information:
For further information: Media Contacts: RBC, Nassau: Jan Knowles, (242)
356-8796, firstname.lastname@example.org; Toronto: Beja Rodeck, (416) 974-5506, Toll-free
1-888-880-2173, beja.rodec email@example.com; RBTT Financial Group, Port of Spain:
Paul Charles, (868) 623-1322 ext. 2449, firstname.lastname@example.org; Investor
contacts: RBC, Marcia Moffat, (416) 955-7803, email@example.com; Amy
Cairncross, (416) 955-7809, firstname.lastname@example.org; For general investor
relations information please visit: www.rbc.com/investorrelations; RBTT, Paul
Charles, (868) 623-1322 Ext. 2449, email@example.com; Mary Siu Butt,
(868) 623-1322 Ext. 2406, firstname.lastname@example.org