TIAA-EverBank Deal Offers a Lesson on Acquisitions
ByAn unorthodox American bank deal has provided the industry with a timely reminder on mergers and acquisitions. TIAA, the giant pension fund, is acquiring EverBank, a small bank that does business primarily online, for $2.5 billion.
TIAA, a nontraditional buyer, should be able to slash enough costs to justify the price tag, and regular lenders might find even more costs to cut. With earnings under pressure, such acquisitions are bound to become increasingly necessary.
EverBank is a prime example of a target. Despite operating mostly as an internet bank, it bears similar characteristics to Main Street rivals: Its revenue is struggling to grow; it spends about 67 cents of each dollar of revenue on expenses, more than U.S. Bancorp and Wells Fargo, which usually spend at least 10 cents a dollar less; and its return on equity rarely pitches over the 10 percent mark generally considered sufficient to cover the cost of capital…
TIAA-EverBank Deal Offers a Lesson on Acquisitions
