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Abstract

Bob Kelly, the new CEO of Mellon Financial, is considering the terms of a proposed 'merger of equals' with The Bank of New York, just before the final Board meeting to approve the deal. The combination offers a great strategic fit, and the expected synergies are large. However, the proposed exchange ration values Mellon at a discount to its last closing price, even though it is the smaller and non-surviving bank. Kelly must consider the various dimensions of the deal - specifically the value of synergies, the form of consideration, and the deal's impact on the eps of both sides - and determine whether it is in the best interests of Mellon, the city of Pittsburgh, and Mellon's shareholders.
Location:
Industry:
Size:
USD10 billion, 30,000 employees
Other setting(s):
2006

About

Abstract

Bob Kelly, the new CEO of Mellon Financial, is considering the terms of a proposed 'merger of equals' with The Bank of New York, just before the final Board meeting to approve the deal. The combination offers a great strategic fit, and the expected synergies are large. However, the proposed exchange ration values Mellon at a discount to its last closing price, even though it is the smaller and non-surviving bank. Kelly must consider the various dimensions of the deal - specifically the value of synergies, the form of consideration, and the deal's impact on the eps of both sides - and determine whether it is in the best interests of Mellon, the city of Pittsburgh, and Mellon's shareholders.

Settings

Location:
Industry:
Size:
USD10 billion, 30,000 employees
Other setting(s):
2006

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