DNB Bank (DNB) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of 100% of Carnegie aligns with a consistent strategy to strengthen investment banking, asset management, and wealth management platforms, enhancing fee and commission income and Nordic market presence.

• Carnegie's strong brand, complementary product mix, and expertise in Sweden and other Nordic markets provide a unique growth platform and enhance the combined offering for clients.

• The merger bridges Nordic and international markets, leveraging combined local expertise and global reach.

• Both organizations highlight a strong cultural fit and mutual excitement about future opportunities.

• The deal is seen as a step change in rebalancing income mix toward fee-based revenues, with a 30% estimated growth in fee income.

Financial terms and conditions

• Purchase price is approximately SEK 12 billion, payable in cash, subject to adjustments and a normalized core Tier 1 capital ratio at closing.

• Transaction expected to close in the first half of 2025, pending regulatory approvals in multiple jurisdictions.

• Carnegie's 2024 net income is SEK 535 million with an 18% ROE for the first nine months; 2025 net income expected to exceed SEK 1 billion, implying a P/E multiple of about 12x.

• Transaction is expected to be accretive to EPS and ROE, with a return on invested capital above 15% on a fully integrated basis.

• DNB's CET1 ratio is expected to decrease by about 1.2 percentage points but will not negatively impact dividend policy.

Synergies and expected cost savings

• Main synergies are revenue-driven, leveraging broader product offerings and advisory capabilities across geographies and sectors.

• Efficiency gains are expected across the combined business, driven by a stronger Nordic platform and improved client offerings.

• Cost synergies exist but are not the primary driver; integration costs are expected to be lower than typical due to limited technological overlap.

• Complementary business models and cultures are expected to benefit both customers and employees.

• Majority of uplift to 15% ROIC is expected from revenue synergies rather than cost savings.