Nisha Gopalan
2 min read
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Northern Trust shares surged Monday after Bank of New York Mellon reportedly approached the smaller bank about a merger last week.
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CEOs at the two banks had at least one conversation, though haven’t discussed a specific offer, according to The Wall Street Journal, citing people familiar with the matter.
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Citi analysts said they would see a deal as a “win-win,” and raised their price targets for Northern Trust stock to $110 from $100, and $92 for BNY from $85.
Northern Trust (NTRS) shares surged almost 6% in premarket trading Monday after Bank of New York Mellon (BK) reportedly approached the smaller bank about a merger last week.
CEOs at the two banks had at least one conversation, though haven’t discussed a specific offer, according to The Wall Street Journal, citing people familiar with the matter. “BNY is considering its next steps, which might include returning to Northern Trust with a formal bid,” the report said.
The report said that Northern Trust isn’t interested in a merger with BNY and noted a tie-up “would marry two of the world’s largest asset-servicing businesses and create an investment-management powerhouse that oversees more than $3 trillion.”
Northern Trust and BNY didn’t immediately respond to Investopedia requests for comment.
Northern Trust shares have risen around 9% so far this year. BNY shares, which entered Monday up almost 20% this year, were little changed in premarket trading.
Citi analysts said they would see a deal as a “win-win,” with the two franchises seeming “complementary" and raised their price targets for Northern Trust stock to $110 per share from $100, and $92 for BNY from $85, "reflecting possibility of acquisition." They noted, however, that “this deal does not seem like a “must have,” and that they "expect BK to be disciplined on pricing and would expect only ~10% premium deal given NTRS’ relatively high valuation.”
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