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PNC » Topics » P LANNED A CQUISITION OF N ATIONAL C ITY

This excerpt taken from the PNC 10-Q filed Nov 6, 2008.

PLANNED ACQUISITION OF NATIONAL CITY

On October 24, 2008, we entered into a definitive agreement with National City Corporation (“National City”) for PNC to acquire National City for approximately $5.9 billion in cash and common stock. Consideration includes approximately $5.5 billion of PNC common stock (based on a five-day average share price including the announcement date), with a fixed exchange ratio of 0.0392 share of PNC common stock for each share of National City common stock, and $384 million of cash payable to certain warrant holders. The transaction is currently expected to close by December 31, 2008 and is subject to customary closing conditions, including the approval of regulators and the shareholders of both PNC and National City.

National City, headquartered in Cleveland, Ohio, is one of the nation’s largest commercial banking organizations based on assets. At September 30, 2008, National City had total assets of approximately $145 billion and total deposits of approximately $96 billion. National City operates through an extensive network in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania and Wisconsin and also conducts selected consumer lending businesses and other financial services on a nationwide basis. Its primary businesses include commercial and retail banking, mortgage financing and servicing, consumer finance and asset management.

PNC is a defendant in numerous lawsuits, filed following announcement of the merger agreement as class actions on behalf of National City stockholders, that seek to enjoin the proposed acquisition of National City by PNC. These lawsuits are pending in the Delaware Chancery Court and the Cuyahoga County, Ohio, Court of Common Pleas. All of these lawsuits also name as defendants National City and its directors. An additional lawsuit, filed in the United States District Court for the Northern District of Ohio as a class action on behalf of National City stockholders, seeks an injunction against the proposed acquisition, but does not name PNC as a defendant. In addition, plaintiff in a previously-pending derivative litigation against the National City directors in the Cuyahoga County Court of Common Pleas has

moved to lift the stay of that action and conduct expedited discovery in support of a proposed amended complaint that, among other things, seeks an injunction against the proposed transaction. PNC is not named as a defendant in this action.

The complaints in these cases allege that the National City directors breached their fiduciary duties to the stockholders of National City in connection with the proposed acquisition. All or some of the lawsuits allege that National City directors breached their fiduciary duties by, among other things, causing the company to enter into the proposed transaction at an allegedly inadequate and unfair price, engaging in self-dealing and acting with divided loyalties, and failing to disclose material information to the stockholders. PNC is alleged to have aided and abetted the individual defendants’ breaches of fiduciary duties. In addition to an injunction, all or some of the complaints seek, among other remedies, an accounting, imposition of a constructive trust, unspecified damages (including rescissory damages), rescission, costs of suit, and attorneys’ fees. With respect to one of the cases pending in the Delaware Chancery Court, the parties are engaged in expedited proceedings in connection with plaintiffs’ motion for a preliminary injunction, with a hearing on the preliminary injunction motion currently scheduled for December 15, 2008.

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