French bank BNP Paribas said on Tuesday its U.S. arm BancWest would buy Fargo, North Dakota-based Community First Bankshares for $1.2 billion, pushing deeper into U.S. retail banking.
After the deal, BNP’s BancWest would become the seventh largest commercial bank in the western part of the United States with more than 500 branches, BNP said.
Its BancWest arm will pay $32.25 in cash for each Community First share -- a more than 15 percent premium to the U.S. bank’s $28 per share closing price on Monday.
“This transaction is in line with our strategy of ’disciplined’ acquisitions -- i.e. value-creating transactions of manageable size, in businesses and geographies with strong growth potential,” BNP Chief Executive Baudouin Prot said in a statement.
The French bank, the euro-zone’s largest by market value, has repeatedly said it wants to expand consumer banking operations in the lucrative and populous U.S. market, particularly in the west where it already owns BancWest.
It has said it had five to six billion euros ($7.37 billion) it could use for deals.
The deal would “generate significant synergies and thus create shareholder value beginning in the very first year,” BNP said.
Community First, which earned $75 million in 2003 and has $5.5 billion in assets, has 155 branches in 12 states in the U.S. West and MidWest.
“It corresponds with what BNP was seeking,” said an analyst in Paris. “It completes fairly well their position in the United States, and the price is right.”
BNP shares closed at 47.55 euros in Paris on Monday.
Community First has traditionally focused on smaller communities and expanded via a string of acquisitions over the past 15 years. It has a strong presence in Colorado, Wyoming, Minnesota and North Dakota, BNP said.
BancWest now has 357 branches in seven western states, but with a concentration in California and Hawaii.
The deal was expected to close in the third quarter this year but was subject to U.S. regulatory and Community First shareholder approval, BNP said.
Community First businesses would operate under the Bank of the West brand after the deal, BNP said.
