06:48 AM EDT, 08/12/2024 (MT Newswires) -- Scotiabank (BNS.TO, BNS), one of Canada's biggest banks, agreed to buy almost 15% of KeyCorp, a U.S.-based financial services company, for about US$2.8 billion.

Scotiabank will pay $17.17 per KeyCorp share, an 11% premium to the average price over the last 20 trading days, the Canadian bank said in a statement.

KeyCorp operates in 15 states and has US$187 billion in assets as well as about 1,000 branches offering commercial and retail banking and investment advice and services.

Scotiabank, which will initially buy 4.9% of KeyCorp in the fourth quarter and follow that up with another 10% next year, expects the investment to be accretive to earnings per share in the first full year following closing of the additional investment.

"We believe that this transaction provides attractive near-term returns to our shareholders and creates future optionality for Scotiabank in the North American corridor, given our unique position as the only Canadian bank with a presence across Canada, the U.S., and Mexico," said Scott Thomson, president and CEO of Scotiabank. "We look forward to exploring mutually beneficial strategic opportunities in the future."

Once it has completed the acquisition of the full 14.9%, Scotiabank can pick two KeyCorp board members comprised of one senior officer of Scotiabank and one third party director designated by Scotiabank and reasonably acceptable to KeyCorp.

At this time, and until such time the Bank elects otherwise, Scotia intends to suspend the discount on its shareholder dividend and share purchase plan effective for dividends to be declared subsequent to the declaration expected on August 27. Consequently, this will be the last dividend that will be eligible to participate in the discount.