PNC has reached an agreement to buy the U.S. unit of the Spanish financial group BBVA’s U.S. business for $11.6 billion in cash, the companies said.

The merger would be the second largest in the banking sector since the 2008 financial crisis. In 2019, BB&T and SunTrust merged in a deal valued at $66 billion.

William S. Demchak, PNC’s chairman, president, and chief executive officer said PNC is funding the deal with proceeds from the sale of its stake in BlackRock. In May, PNC sold its 22% stake in the company through a public secondary offering for $17 billion.

In a statement, PNC said the deal would accelerate its national expansion, giving it a coast-to-coast franchise with a presence in 29 of the 30 largest markets in the country. BBVA USA Bancshares is headquartered in Houston and has $104 billion in assets. It operates 637 branches in Alabama, Arizona, California, Florida, Colorado, and New Mexico.

“This transaction is an opportunity to navigate our future from a position of strength, accelerating PNC’s national expansion strategy while drawing on our experience as a disciplined acquirer,” Demchak said.

The deal is expected to be 21% accretive to earnings in 2022 and to have an internal rate of return to PNC in excess of 19%. It said it expects merger and integration costs of $980 million, inclusive of approximately $250 million in write-offs of capitalized items, with cost savings in excess of $900 million.

The purchase price is estimated at 134% of BBVA USA’s tangible book value, based on its balance sheet as of Sept. 30, 2020, and reflects a deposit premium of 3.7%.

BBVA Group executive chairman Carlos Torres Vila called the deal “very positive” for all sides.

“We will have ample flexibility to profitably deploy capital in our markets strengthening our long-term growth profile and supporting economies in the recovery phase, and to increase distributions to shareholders,” Torres Vila said.

The deal is expected to close in the middle of next year.

BBVA shares jumped more than 16% following the announcement.

Jeff Swensen/Getty Images

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