U.S. Bancorp plans to issue 24 million shares of common stock to an affiliate of Mitsubishi UFJ Financial Group (MUFG) for an aggregate purchase price of $936 million. U.S. Bancorp will use proceeds of the transaction to satisfy a portion of its previously announced repayment obligation to MUFG. The debt/equity conversion is expected to close today and will be accretive to U.S. Bancorp’s capital levels, increasing its CET1 ratio by approximately 20 bps.
As previously announced, on Dec. 1, 2022, U.S. Bancorp completed the acquisition of MUFG Union Bank’s core regional banking franchise. U.S. Bancorp received $3.5 billion in additional cash held by MUFG Union Bank, which, under the terms of the purchase agreement, U.S. Bancorp is required to repay on or prior to the fifth anniversary date of the acquisition, with a reasonable best-efforts obligation to repay up to $1 billion within a reasonable time after conversion. The proceeds of the stock issuance will satisfy the payment requirement made in connection with the conversion, with the remaining obligation due in cash by the previously agreed upon deadline of Dec. 1, 2027.
