M&A

PNC, Riggs Strike a Deal After All

The two banks began their courtship just as a criminal investigation was beginning into Riggs's relationships with foreign leaders and its handling...
Stephen TaubFebruary 11, 2005

The PNC Financial Services Group Inc. will acquire Riggs National Corp. after all. PNC will shell out $20 per share, or about $643 million in a combination of cash and stock.

This is roughly 18 percent less than the figure the two companies agreed on in 2004. Last spring, Pittsburgh-based PNC began courting Washington, D.C.-based Riggs just as a criminal investigation was beginning into Riggs’s dealings with former Chilean dictator Augusto Pinochet and foreign embassies such as those of oil-rich Equatorial Guinea and Saudi Arabia, according to The Washington Post.

Federal regulators accused Riggs of violating money-laundering rules, which require the reporting of large transactions, reported the Post. As the year progressed, more and more embarrassing information was revealed about Riggs’ relationship with Pinochet and the handling of suspicious deposits as far back as the early 1980s, added the paper.

Last year, Riggs paid at least $25 million stemming from a money-laundering investigation. And in January, Riggs pleaded guilty to charges that it helped Pinochet and the leaders of Equatorial Guinea hide hundreds of millions of dollars, according to Bloomberg.

PNC then cut its offering price from $24.25 a share to $20.15 and demanded that Riggs settle at least one lawsuit and set aside funds for other litigation, especially lawsuits related to Saudi Arabia and the September 11 attacks, according to wire-service reports. Riggs responded by suing PNC in Superior Court for the District of Columbia, alleging that PNC was trying to lower the offering price improperly.

The new merger agreement, which is subject to approval by Riggs shareholders and by regulators, does not include any of the PNC demands, and Riggs has agreed to drop its lawsuit.

“We are looking forward to our entry into the extremely appealing Washington, D.C. marketplace, and we are confident that the Riggs franchise will provide us with an excellent platform from which to grow,” said PNC chairman and chief executive officer James E. Rohr, in a statement. “We have assessed the remaining risks to Riggs, and we believe we have reached a revised agreement that is fair to all parties.”