Capital One to acquire ING Direct

SAN FRANCISCO – Capital One Financial Corp. said late Thursday that it has agreed to buy ING Direct from Dutch banking giant ING Groep in a deal valued at $9 billion.

Capital One, the eighth-biggest bank in the U.S., said it will fund the deal with $6.2 billion in cash raised through equity and debt offerings along with about 55.9 million shares of its stock worth $2.8 billion.

“The acquisition of ING Direct is a game-changing transaction that delivers attractive deal economics immediately and compelling long-term strategic value,” Capital One Chairman and Chief Executive Richard Fairbank said.

ING Groep announced in 2009 it was looking for a buyer for ING Direct, a move aimed at winning the backing of European Commission regulators for an extensive overhaul of its European operations at the height of the global banking crisis.

Capital One, which will incur $210 million in costs to complete the deal, is looking to save $90 million through consolidating systems and staff functions. Another $200 million a year is expected to be saved by streamlining its asset management.

The combined company, which will become the fifth-biggest bank in the U.S., will also potentially benefit from cross-selling ING’s ShareBuilder online brokerage products to Capital One customers and vice versa, according to Capital One.

ING Groep will hold a 9.9 percent stake in Capital One and will have the right to name one member to the company’s board of directors.

The deal is subject to regulatory approvals in both the U.S. and the Netherlands and is expected to close between late 2011 and early 2012.