BNY would have ‘room’ to offer Northern a premium, says Morgan Stanley

After The WSJ reported that BNY Mellon (BK) recently approached Northern Trust (NTRS) about a potential merger, specifying that the firms’ CEOs have had at least one conversation and that BNY is considering a formal bid, Morgan Stanley said the firm’s hypothetical analysis suggests BNY could accretively acquire NTRS on tangible book at up to a 44.5% premium in an all-stock deal. On an EPS basis alone, the firm’s analysis suggests BNY could accretively acquire Northern at up to a 58% premium using 30% cost savings, adds the analyst, who has an Underweight rating and $103 price target on Northern Trust shares.