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National City Upped on Buyout
On October 24, 2008, PNC Financial Services Group (PNC - Snapshot Report) and National City Corp. (NCC) announced that they have signed a definitive agreement for PNC to acquire NCC for $2.23 per share.
National City's 3Q08 operating loss of $0.85 per diluted share was substantially worse than the estimates, primarily due to higher credit costs. During the quarter, credit metrics continued to deteriorate. Since our September 19, 2007 rating change to Sell, the shares of NCC have yielded a negative 92.2% total return.
Based on the acquisition agreement with PNC, which is expected to close by the end of FY08, we are now upgrading our recommendation on the shares to a Hold, with a target price of $2.15 per share.