Mechanics Bank Acquires Rabobank’s US Business In $2.1bn Deal
Moneylenders, like banks, in the U.S are trying to consolidate the businesses by merging companies with similar principles so that they can move forward in a more comprehensive manner. One such deal was struck when Mechanics Bank decided to buy parts of Rabobank Groups for a whopping $2.1 billion.
The main businesses which Mechanics Bank is going to take over from Rabobank are the real estate, business banking, management of wealth and mortgages. The net worth of Rabobank stood at $13 billion with more than a hundred branches while it is $6 billion for Mechanics with 44 branches. According to the CEO of Mechanics, John DeCero, this tie-up in a sense that the two companies are poles apart and there are very few aspects that among them. Even looking at the geographical distribution, there are only two areas, Napa and Westlake, that both of them have their offices.
Thus, they will be able to complement each other perfectly. This merger is one among many that are happening between banks, with the deal between BB&T Corp. and SunTrust bank being of $28 billion, which is one of the largest financial bank tie-ups that have taken place till date. The deal with Rabobank will also allow Mechanics to cover more terrain spread across California as they are mainly based on the Northern side.
Rabobank is a Dutch-based lender bank while Mechanics is owned by a private equity firm based in Dallas called the Ford Financial Fund. They have a hold over 79 % of the shares under Mechanics. Under the criteria of the deal, Rabobank will receive the outstanding 9.9 % share, legitimizing the opportunity to grow and expand together. Rabobank’s agriculture and food business are not part of the deal though. Recently, Rabobank got embroiled in a controversy that alleged that a lot of Mexican drug cartel money was being navigated through them and they did not disclose the details even when they were asked to. They plead guilty and paid $369 million in penalties. This primarily led to this huge financial merger, some experts believe.