Laurentian to be acquired by Fairstone for $40.50/share

Executive Summary

• Laurentian Bank of Canada has entered into a coordinated transaction to exit its retail and SME banking business, accelerating its strategic shift to a specialty commercial bank model.
• Fairstone Bank of Canada will acquire all issued and outstanding common shares of Laurentian Bank for $40.50 per share in cash, representing a ~20% premium and ~$1.9 billion total consideration. Laurentian Bank will retain its brand and Montreal headquarters.
• National Bank of Canada will acquire Laurentian Bank’s retail and SME banking portfolios (loans, deposits, and mutual fund distributions) and syndicated loan portfolio, complementing National Bank’s activities in Quebec.

Key Details

• Fairstone Bank Acquisition (Share Purchase):
  • Price: $40.50 per share in cash.
  • Premium: ~20% over the closing price of $33.76 on Dec. 1, 2025; ~22% over the 20-day VWAP.
  • Total Consideration: Approximately $1.9 billion.
  • Terms: Subject to approval by 66.67% of votes cast at a special shareholder meeting expected in Q1 2026.
  • Fees: $40 million termination fee payable by Laurentian Bank to Fairstone in certain circumstances (e.g., superior proposal); $40 million reverse termination fee payable by Fairstone to Laurentian if regulatory approvals are not obtained.
  • Closing: Expected by late 2026, subject to regulatory approvals and closing of the National Bank transactions.
  • Listing: Laurentian Bank common shares will be delisted from the TSX. Class A preferred shares (Series 13) will remain listed.
• National Bank Transactions (Asset Purchase & Loan Sale):
  • Retail/SME Portfolio: National Bank will acquire retail and SME banking portfolios.
    • Retail Loans/Deposits (as of July 31, 2025): ~$3.3 billion / ~$7.6 billion.
    • SME Loans/Deposits (as of July 31, 2025): ~$800 million / ~$600 million.
    • Mutual Funds: National Bank assumes distribution agreements for mutual funds totaling ~$3.4 billion.
  • Syndicated Loan Portfolio: National Bank will acquire syndicated loans totaling ~$900 million (as of July 31, 2025).
  • Consideration: Fully settled in cash/cash equivalents based on outstanding balances at closing (approximating net book value).
  • Fees: $10 million termination fee payable by Laurentian Bank to National Bank; $10 million reverse termination fee payable by National Bank to Laurentian.
  • Syndicated Loan Closing: Expected in approximately three months, not conditional on the other transactions.
  • Impact on National Bank: Expected to be accretive to adjusted EPS by 1.5% to 2% in the first year; reduces Common Equity Tier 1 ratio by 25-30 basis points.
• Strategic & Operational Details:
  • Laurentian Bank will exit retail and SME banking to focus on commercial real estate lending, inventory/equipment financing, intermediary services, and capital markets.
  • Laurentian Bank retains its brand identity and head office in Montreal.
  • Eric Provost remains President and CEO.
  • All Laurentian Bank branches in Quebec will be closed by Laurentian Bank prior to the closing of the retail/SME transaction.
  • Employees and branches are not transferred to National Bank; affected employees may apply for roles at National Bank.
• Shareholder Support:
  • La Caisse (holding ~8% of shares) has entered into a voting and support agreement to vote in favor of the acquisition.
  • Support is conditioned on maintaining Laurentian Bank’s commercial head office locally and moving Fairstone Bank’s head office to Montreal.
• Advisers:
  • Laurentian Bank: J.P. Morgan (lead financial adviser), Blair Franklin Capital Partners (independent financial adviser to special committee), Osler, Hoskin & Harcourt (legal counsel).
  • Fairstone Bank: National Bank Capital Markets (financial adviser), Torys LLP and Stikeman LLP (legal advisers).
  • National Bank: McCarthy Tetrault LLP (legal adviser).

Notable Quotes

• Eric Provost, President and CEO, Laurentian Bank: "This announcement is aligned with the acceleration of Laurentian Bank's commercial specializations... Joining forces with Fairstone Bank will allow us to grow our specialized commercial business even further, while maintaining our brand identity and head office in Montreal... Partnering with National Bank will allow our customers to benefit from a broader range of services and improved, modern technology."
• Scott Wood, President and CEO, Fairstone Bank: "We view Quebec as a key market and are excited to continue building our presence with the expertise we're acquiring from Laurentian Bank... This transaction strengthens Fairstone Bank's competitive position, diversifies revenue streams, and deepens our national lending footprint."
• Laurent Ferreira, President and CEO, National Bank: "Leveraging our strong presence in Quebec, this transaction aligns with our domestic growth strategy and is a natural fit... We look forward to welcoming Laurentian Bank's retail, SME and syndicated loan clients, who will soon benefit from National Bank's leading digital services..."
• Kim Thomassin, Executive Vice-President and Head of Quebec, La Caisse: "La Caisse is supportive of this transaction and considers it to be a positive outcome for shareholders... Our support is also predicated on the fact that the proposed offer is attached to guarantees obtained regarding maintaining Laurentian Bank's commercial head office locally..."