Bank Of New York Mellon (NYSE: BK) To Acquire Global Investment Unit From PNC Financial (NYSE: PNC) For $2.3 Billion

Bank of New York Mellon (NYSE: BK) announced Tuesday that it is in agreement to acquire the global investment servicing unit of PNC Financial (NYSE: PNC) for $2.31 billion.  The move will strengthen the banks position in the fund accounting and management industry, while providing PNC well needed cash as it seeks to payback government TARP money.

The transaction is an all cash deal that calls for Bank of NY Mellon to purchase $1.57 billion in stock and repay the balance of intercompany debt from PNC.

After the transaction is complete, Bank of NY Mellon will be the second largest provider of fund accounting, administration and transfer services for fund managers worldwide.

“This acquisition significantly strengthens our service offering and market share with asset managers and financial advisors, while delivering attractive returns to our shareholders,” said Robert P. Kelly, BNY Mellon chairman and chief executive officer. “We expect the transaction to accelerate our growth, deliver economies of scale and strengthen our leadership position for Asset Servicing and Pershing.”

Bank of New York Mellon also plans to raise $800 million in equity as part of the acquisition deal, which is expected to close in the third quarter, pending regulatory approvals.

The deal helps PNC Financial toward their goal of repaying $7.6 billion in TARP money it received.  Late last year, PNC CEO James Rohr said the firm planned to payback TARP in 2010.

According to the bank’s press release, it plans to leave the global investment servicing unit largely intact, with current CEO of the group, Stephen M. Wynne, set to remain in that role.  The unit employs about 4,500 people worldwide.