Case | HBS Case Collection | February 2008 (Revised October 2010)

Mellon Financial and The Bank of New York

by Carliss Y. Baldwin and Ryan Taliaferro

Abstract

Bob Kelly, the new CEO of Mellon Financial, is considering the terms of a proposed "merger of equals" with The Bank of New York, just before the final Board meeting to approve the deal. The combination offers a great strategic fit, and the expected synergies are large. However, the proposed exchange ration values Mellon at a discount to its last closing price, even though it is the smaller and non-surviving bank. Kelly must consider the various dimensions of the deal-specifically the value of synergies, the form of consideration, and the deal's impact on the EPS of both sides-and determine whether it is in the best interests of Mellon, the city of Pittsburgh, and Mellon's shareholders.

Keywords: Mergers and Acquisitions; Equity; Banks and Banking; Business and Shareholder Relations; Valuation; Banking Industry; Pittsburgh;

Citation:

Baldwin, Carliss Y., and Ryan Taliaferro. "Mellon Financial and The Bank of New York." Harvard Business School Case 208-129, February 2008. (Revised October 2010.)