Wells Fargo to Acquire Burdale - Analyst Blog

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Yesterday, Wells Fargo & Company ( WFC ) announced that it would acquire Bank of Ireland 's ( IRE ) Burdale for €690 million ($898 million) in an effort to broaden its international commercial finance capabilities. The deal is expected to close in early 2012.

Headquartered in London, Burdale is a leading provider of comprehensive asset-based lending and operates in and across the UK and US markets. Wells Fargo will purchase Burdale Financial Holdings Limited, the UK entity, and the portfolio of Burdale Capital Finance Inc., the US entity, which represents around $1 billion in loans outstanding from US and UK customers. Following the deal closure, Burdale will become part of the asset-based lending group of Wells Fargo - Wells Fargo Capital Finance.

The deal is a strategic fit for Wells Fargo. It would enable the company to broaden its horizon and expand its asset-based lending business into the UK which in turn would help the company to serve its US-based customers doing business in the UK.

Of late, Wells Fargo also agreed to purchase investment boutique firm EverKey Global Partners in an effort to broaden its investment capabilities and provide strategies to meet the needs of its clients. The two companies have signed a definitive agreement in this context. The deal is expected to close by January 1, 2012. However, the terms of the deal were not disclosed.

Such strategic acquisitions will help expand Wells Fargo's business and improve its profitability. Its solid business model, strong capital position and expanded business through the Wachovia acquisition and its integration, expense management and improved credit quality will also support its profit figures. Yet, a sluggish economic recovery and its impact on revenue will somewhat limit its growth.

Wells Fargo currently retains a Zacks #3 Rank, which translates into a short-term 'Hold' rating.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: IRE , WFC

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