NEW YORK (CNNfn) - Washington Mutual Inc. agreed Monday to acquire PNC Financial Services Group Inc.'s residential mortgage business for $605 million cash, making it the third-largest mortgage lender in the nation.|
Washington Mutual will buy PNC Mortgage Corp. and PNC Mortgage Securities Corp. at a 54 percent premium above the "agreed-upon fair-market value of PNC's equity," the company said.
After completion of the acquisition, Seattle-based Washington Mutual (WM: Research, Estimates) will manage a mortgage servicing portfolio of about $291 billion.
"In one move, we have greatly accelerated Washington Mutual's progress in achieving one of its key business initiatives: combining the strengths of a portfolio lender and mortgage banker to enhance our capacity to originate loans throughout the entire interest-rate cycle and to do so through a broad national footprint," Washington Mutual Chairman, President and CEO Kerry Killinger said.
Pittsburgh-based PNC (PNC: Research, Estimates) said it will use proceeds of the sale for various corporate purposed, which could include repurchasing shares of common stock.
Shares of Washington Mutual rose 19 cents to $40 in midday trading, while shares of PNC rose 50 cents to $65.50.