National City Corporation to Buy Fidelity Bankshares for 4.35 Times Revenue

The Deal: National City Corporation entered into a definitive
agreement to purchase Fidelity Bankshares Inc. for
approximately $1 billion. Under the terms of the deal,
Fidelity shareholders will be able to choose to receive either
$39.50 in cash or 1.0977 National City shares in exchange
for each share of Fidelity. Based on recent closing prices,
the option to elect payment in National City shares values
Fidelity at about $40.33 per share. The transaction is scheduled
to close in the first quarter of 2007, subject to regulatory
and Fidelity shareholder approvals.
Discussion: Fidelity Bankshares is the holding company for
Fidelity Federal Bank & Trust. The bank operates more than
50 branches in southeastern Florida. Fidelity is the fourthlargest
publicly traded banking institution in Florida. The
company also sells insurance and investment products
through subsidiary Florida Consolidated and performs real
estate sales through Fidelity Realty and Appraisal Services.
National City Corporation operates about 1,150 bank
branches. The company provides banking services in
Illinois, Indiana, Kentucky, Michigan, Missouri, Ohio, and
Pennsylvania. In addition to traditional deposit banking services,
National City offers asset management, consumer finance, mortgages, and leasing.The acquisition of Fidelity follows closely after National City’s
purchase of Harbor Florida Bancshares. The acquisitions are
part of a strategy to expand in Florida, which is currently a high
growth market.

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