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. Last Updated: 07/27/2016

HSBC Plans to Buy Republic N.Y. for $10.3Bln




LONDON -- Britain's largest banking group, HSBC Holdings PLC, announced Monday a $10.3 billion takeover of U.S. banking group Republic New York Corp. and its European private banking affiliate, SRH. The acquisition, HSBC's largest, would be its strongest move yet into the U.S. market and a major expansion of its private banking operations.


HSBC said in February it would list in New York this year, which sparked speculation it would be used as a launch pad for a big acquisition in the United States, where it has been relatively underrepresented until now.


The all-cash bid agreed on would be one of the largest foreign takeovers of a U.S. bank since Deutsche Bank announced its $10.1 billion bid for Bankers Trust.


HSBC's bid of $72 per share values the New York-based Republic New York Corp. and its 49 percent stake in Safra Republic Holdings, or SRH, at $7.6 billion.


The bid values the 51 percent of SRH not owned by Republic at $2.6 billion. SRH is a Luxembourg-based private banking group with subsidiaries in France, Switzerland, Gibraltar, Monaco and Guernsey


HSBC said it would fund the acquisition with a $3 billion placement of ordinary HSBC shares, the planned issue by a special purpose vehicle of preference shares, tier 2 debt issuance and existing HSBC cash.


It said the deal, which had been approved by both the SRH and Republic boards, would deliver annual cost savings of more than $300 million within two years and would generate restructuring charges after tax of about $450 million in 1999 and 2000.


HSBC Group chairman John Bond said HSBC's strategy was to complement organic growth with selective acquisitions, and it wanted to maintain the balance between countries and emerging markets.