Notable Mergers and Acquisitions of the Day 06/20: (PNC)/(RY) (HRBN) (S)

• The PNC Financial Services Group, Inc. (NYSE: PNC) and Royal Bank of Canada (NYSE: RY) has entered into a definitive agreement whereby PNC will acquire RBC Bank (USA), the U.S. retail banking subsidiary of Royal Bank of Canada, for $3.45 billion, or $112 million discount to tangible book value.
  
  PNC expects the transaction to be accretive to earnings by the end of 2013 or sooner depending on the amount, if any, of the $3.45 billion purchase price paid in the form of PNC common stock. Under terms of the agreement, PNC will have the option to deliver to Royal Bank of Canada at closing up to $1.0 billion of the consideration in common stock, or 3 percent of PNC's outstanding common shares based on PNC's closing price of $57.79 on June 17, 2011.
  
  PNC plans to incur merger and integration costs of approximately $322 million and achieve a reduction of approximately $230 million, or 27 percent, of RBC Bank (USA) noninterest expense through operational and administrative efficiency improvements.
  
  Under terms of the agreement, the purchase price is subject to a price adjustment at close for actual net tangible asset value delivered. PNC expects to fund the cash consideration with cash on hand, debt issuance and a preferred stock offering. Consideration paid in the form of PNC common stock, if any, will be limited so that Royal Bank of Canada's direct and indirect ownership of PNC common stock will not exceed 4.9 percent of PNC's outstanding common shares immediately following the close.
  
  Closing is expected in March 2012.
  
  Bank of America Merrill Lynch acted as financial adviser to PNC and Wachtell, Lipton, Rosen & Katz was legal counsel. RBC Capital Markets and J.P. Morgan Chase & Co. represented Royal Bank of Canada as financial adviser and Sullivan & Cromwell LLP was legal counsel.
  
  
• Harbin Electric (Nasdaq: HRBN) has entered into a definitive agreement and plan of merger with Tech Full Electric Co. to be acquired by Tech Full for $24 per share.
  
  Tech Full Electric is wholly owned by Harbin CEO Tianfu Yang.
  
  Closing is expected in Q411.
  
  Morgan Stanley & Co. Incorporated and Lazard Freres & Co. LLC are serving as financial advisors to the Special Committee. Goldman Sachs (Asia) LLC is serving as financial advisor to Mr. Tianfu Yang. Gibson, Dunn & Crutcher LLP is serving as legal advisor to the Special Committee. Loeb & Loeb LLP is serving as legal advisor to the Company. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Mr. Tianfu Yang. Davis Polk & Wardwell LLP is serving as legal advisor to Abax.
  
  
• Philip Falcone's Harbinger Capital Partners announced late Friday LightSquared has signed a 15-year agreement with Sprint Nextel (NYSE: S) to build and operate a planned new wireless network.
  
  Falcone disclosed the development in a letter to investors.
  
  LightSquared plans to build a national, high-speed 4G LTE network, which it will then lease to other wireless providers that want to offer high-speed Internet to customers.
  
  The deal, valued at about $20 billion, will share expansion costs with Sprint. LightSquared will install its equipment on towers owned by Sprint.
  
  Falcone has planned to offer coverage for 92 percent of the U.S. by 2015.
  
  The deal should be a boon for Sprint as well, as the Overland Park, KS-based mobile provider looks to offer its customers more, but doesn't want to bog down its own network.

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