National City Corp's sale to PNC Financial Services Group Inc has surprised some Wall Street analysts who did not see an immediate catalyst for the sale given the company's good capital and reserve levels.
"In our opinion, NCC was in essence forced into finding an acquirer at a panic price," said Sanford C. Bernstein analyst Kevin St. Pierre, who considers the deal a "boon" for PNC shareholders and a "boondoggle" for NCC shareholders.
Kevin St. Pierre downgraded National City to "market perform" from "outperform" and upgraded PNC to "outperform" from "market perform."
On Friday, PNC said it will acquire National City for $5.6 billion.
Commenting on possible reasons for the sale, Citigroup analyst Keith Horowitz said "it is possible there was a change in management's outlook or a push from the government, though we have no confirmation of either scenario."
Horowitz downgraded National City to "hold" from "buy."
BMO Capital Markets also downgraded the stock to "market perform" from "outperform" and said it was "surprised that NCC sold out at a take-under price."
Shares of National City were trading at $1.98 before the bell, down 4 percent from its Friday close. PNC shares closed at $58.88 Friday on the New York Stock Exchange.
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