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Case
| HBS Case Collection
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2010
(Revised from original 2008 version)
Mellon Financial and The Bank of New York
by
Carliss Y. Baldwin and Ryan Taliaferro
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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;