HSBC to acquire Metris

HSBC to acquire Metris

Europe’s largest bank by market value HSBC Holdings Plc has announced plans to acquire credit-card issuer Metris Cos. The deal is worth around $1.59 billion and it will help HSBC expand its operation in the United State region. The area is the most profitable market for the bank and the aim is to grow and increase the potential to increase revenues. As a part of the deal, Common shareholders of Metris will receive about $911.1 million, or about $15 per share.

HSBC would also be paying $682.6 million to buy out the preferred stock in Metris held by Thomas H. Lee Partners LP, a private-equity firm. The bank is noticing declining profits in its primary markets of Europe and Hong Kong and this has made them interested into acquiring corporations in lucrative markets. This just one of the potential first deals for the company.

This acquisition would also result in increasing the size of the London-based bank’s credit-card business in the U.S. by almost a third. The deal also gets HSBC a big customer base that would now move onto HSBC giving them more chances to serve the customers leading to higher revenues. They have more services on offer than Metris like home equity loans, mortgages, auto loans and unsecured personal loans.

The company aims to complete the transaction by the end of the year. David Robertson, president of the Nilson Report said in a statement about this news: “The credit-card business is going to be growing in single digits. If you want to be in the top handful of issuers, you’ve got to get even more scale than what five years ago would have been considered to be a very large portfolio.”