Laurentian Bank Shares Hit Two-Year High on Plans for Break-Up, Takeover

By Robb M. Stewart

Laurentian Bank of Canada's shares rallied to their highest price in more than two years after it reached a deal to be broken up and sold to alternative lender Fairstone Bank and National Bank of Canada.

Fairstone will buy Laurentian's commercial operations in a 1.9 billion Canadian dollars ($1.36 billion) deal, while National Bank will acquire the retail and small business operations of Laurentian for roughly book value.

Laurentian's name will live on as a part of Fairstone, with its head office remaining in Montreal, but its branches in Quebec will close. Laurentian employees will be given the option to apply for open roles at National Bank.

Shares climbed 18% to C$39.91 in midday trading on Tuesday. That was off slightly from an intraday high of $40 per share, the stock's highest price in more than two years. Shares are up 38% this year.

Under the terms of the deal, Fairbank said it will buy Laurentian's shares for C$40.50 each in cash, a premium of about 20% above Monday's closing price in Toronto. Fairbank will combine its commercial lending operations with those of Laurentian as it aims to increase scale and accelerate growth in commercial real estate across the country, and particularly in Quebec.

Eric Provost will retain his role as president and chief executive of Laurentian Bank.

Questions have lingered about Laurentian's future after it failed in 2023 to find a buyer during a strategic review. The company then shifted its focus to simplifying its organizational structure to lift shareholder returns. That came at a time when banks in Canada were under pressure from rapidly rising interest rates and a slowing housing market, which led to increased provisions for soured loans.

Laurentian said the deals with Fairstone and National Bank would accelerate a shift to becoming a specialty commercial bank, and marked a significant step forward in its strategic plans. What remains of Laurentian will concentrate on commercial real estate lending, inventory and equipment financing, intermediary services and capital markets activities.

National Bank, Canada's sixth-largest bank, said it would buy Laurentian's assets for cash and cash equivalents, with the final price based on outstanding balances when the transaction closes.

The deal will see it pick up roughly C$3.3 billion in retail banking loans, and C$7.6 billion in deposits, while also assuming a distribution agreement related to some C$3.4 billion of mutual funds. It also will land roughly C$800 million in small and medium-sized business loans and C$600 million in deposits, plus C$900 million in commercial and corporate banking loans.

National Bank, which earlier this year wrapped up a C$5.3 billion acquisition of Canadian Western Bank to broaden its footprint in the country, said its latest acquisition will boost underlying earnings per share and lift its presence in Quebec.

Shares of National Bank rose 1.6% to C$170.79 in Tuesday trading, and are now up about 30% this year.

Write to Robb M. Stewart at robb.stewart@wsj.com

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December 02, 2025 12:29 ET (17:29 GMT)