Robbins LLP: Acquisition of City National Corporation (CYN) by Royal Bank of Canada (RY) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of City National Corporation (NYSE: CYN) by Royal Bank of Canada (NYSE: RY). On January 22, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Royal Bank of Canada will acquire City National. Under the terms of the agreement, City National shareholders will receive $93.80 of value per share of City National, consisting of approximately $47.25 in cash and 0.7489 of a Royal Bank of Canada Class A common share.
Is the Proposed Acquisition Best for City National and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at City National is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $93.80 merger consideration represents a premium of only 17.82% based on City National’s closing price on December 19, 2014. This premium is significantly below the average one-month premium of nearly 41.6% for comparable transactions within the past five years.
On October 23, 2014, City National released its earnings results for its third quarter 2014, reporting record quarterly earnings. In particular, City National reported net income of $68.7 million for the quarter, an 8% increase from $63.6 million in the same quarter of the prior year. In addition, City National reported that its third quarter deposit balances averaged $26.8 billion, up 10% from the third quarter of 2013, which contributed to the company reaching a record level of total assets of $32 billion on September 30, 2014. Additionally, City National has beat consensus analyst estimates for sales in three of its past four quarters. In commenting on these results, City National Chairman and Chief Executive Officer Russell Goldsmith remarked, “City National recorded its most profitable quarter in the company’s 60-year history and again achieved robust double-digit growth in assets, deposits and wealth management income… The company’s year-to-date performance provides solid momentum heading into the final quarter of 2014.”
In light of these facts, Robbins LLP is examining City National’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
City National shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
City National shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
