Laurentian Bank Acquired by Fairstone and National Bank in $1.9 Billion Deal

Laurentian Bank of Canada has reached an agreement to be acquired by Fairstone Bank of Canada and National Bank of Canada in a deal valued at $1.9 billion. This all-cash transaction will see Fairstone acquire all common shares of Laurentian at a price of $40.50 per share, reflecting a 20 percent premium over the closing stock price on Monday.

Fairstone plans to merge its commercial lending unit with Laurentian's to enhance its market presence, particularly in Quebec, as stated by Fairstone CEO Scott Wood. Laurentian Bank, which has been struggling with declining profits and rising costs, reported a profit of $37.5 million in the third quarter but faced flat revenue and a concerning efficiency ratio of 75.7 percent.

Laurentian's CEO Eric Provost will retain his position and oversee the bank's restructuring efforts, focusing on its commercial real estate lending and equipment financing. National Bank will acquire Laurentian's retail and small and medium-sized enterprises banking segments, which include approximately $3.3 billion in retail loans and $7.6 billion in retail deposits.

National Bank CEO Laurent Ferreira emphasized that this acquisition aligns with their growth strategy in Quebec, with the transaction expected to boost their retail and SME loans by 2.5 percent and retail deposits by 6 percent.

This acquisition follows a series of banking consolidations in Canada, including National Bank's previous purchase of Canadian Western Bank in February, valued at $5 billion. Laurentian's recent history includes a failed sale process in 2023 and a significant system outage that led to the termination of its former CEO, Rania Llewellyn.

Caisse de depot et placement du Quebec, which holds about 8 percent of Laurentian's shares, has agreed to vote in favor of the acquisition, pending certain conditions. The transactions are anticipated to close by late 2026.

Following the announcement, shares of Laurentian surged by 18.5 percent, while National Bank's stock rose by 1.7 percent on the Toronto Stock Exchange.