Scotiabank buys 14.9% stake in KeyCorp for $2.8bn
Canadian banking heavyweight Scotiabank has agreed to buy a 14.9% pro-forma ownership stake in KeyCorp, the parent of Ohio-based KeyBank, for a total cash consideration of $2.8 billion.
Scotiabank acquires 14.9% stake in KeyCorp
The investment, pending regulatory approval, will occur in two phases. Scotiabank will pick up an initial 4.9% stake anticipated to close in the fourth quarter of the fiscal year 2024, before acquiring the additional 10% in the fiscal year 2025.
Once the additional investment is finalised, Scotiabank will have the opportunity to appoint two members to KeyCorp’s board of directors: one senior Scotiabank executive and one third-party director.
KeyCorp is a financial services firm operating 1,000 branches and around 1,200 ATMs across 15 US states, managing $187 billion in assets. The company offers individuals and businesses a range of services including cash management, deposits, lending, and investment services.
Commenting on the deal, Scott Thomson, Scotiabank’s president and CEO, says the investment “significantly increases the capital deployed to our identified priority markets”.
“We believe that this transaction provides attractive near-term returns to our shareholders and creates future optionality for Scotiabank in the North American corridor, given our unique position as the only Canadian bank with a presence across Canada, the US, and Mexico,” Thomson adds.
In November last year, Canadian Tire bought back Scotiabank’s 20% stake in its financial services arm, CTFS, through an all-cash transaction valued at around $650 million.
