Royal Bank of Canada (NYSE: RY) and Bank of Montreal (NYSE: BMO) announced after market close on Monday that they have reached a definitive agreement to sell Moneris Solutions, their jointly owned payment processing firm, to private equity firm Francisco Partners. The transaction values Moneris at C$2.0 billion, approximately US$1.44 billion, and is expected to close in the first quarter of fiscal 2027, subject to customary regulatory approvals.
Under the terms, each bank will receive C$1.0 billion for its 50% stake. RBC anticipates a net after-tax gain of roughly C$475 million, representing about 47.5% of its gross proceeds. BMO did not disclose a comparable gain figure in its public statement. The sale price reaches the top of the C$1.5 billion to C$2.0 billion range that had been reported when the sale process became public in August 2025.
While the banks will relinquish direct ownership, they will preserve their customer relationships through long-term referral agreements and other commercial partnerships with Moneris. This structure allows RBC and BMO to continue participating in the merchant payments ecosystem without bearing the ongoing technology investment burden, which will now fall to Francisco Partners.
Moneris CEO James Hicks welcomed the deal, stating that the banks' decision to maintain referral and commercial ties underscores their confidence in the company. The payment processor serves more than 325,000 points of commerce and handles over 5 billion transactions annually, according to company statements. Reuters previously reported that Moneris generated nearly C$700 million in annual revenue during the sale process.
The valuation metrics, while not official forecasts, provide context: the deal implies roughly C$6,154 per point of commerce and about C$0.40 per annual transaction, with a revenue multiple of approximately 2.9 times. However, these figures should be interpreted cautiously, as payment processors typically handle transaction volumes far exceeding their reported revenue, and valuation is driven by fee structures, merchant loyalty, and capital requirements.
For Francisco Partners, the acquisition provides immediate access to a substantial Canadian merchant network. For the banks, the transaction converts a mature joint venture into cash while retaining distribution channels through the referral agreements, which will be the primary ongoing link.
Investors will likely focus on the valuation rather than the one-time gain. Canadian bank stocks have been trading near eight-year highs, with major banks valued at about 15 times forward earnings, compared to roughly 12 times for U.S. peers. At Monday's close, RBC shares on the NYSE were at US$210.79, down 0.14%, while BMO shares were at US$181.91, up 0.20%. Analyst consensus, based on data from S&P Global, shows a Buy rating for RBC and a Hold for BMO, with average price targets of US$193.28 and US$161.71, respectively, implying potential downside from current levels.
The market will respond fully on Tuesday. Key risks include potential regulatory delays, the possibility of lower long-term payment revenues, and the impact of private equity ownership on pricing and investment strategy. BMO is scheduled to report earnings later in August, while RBC will follow on August 27, with investors looking for details on accounting gains, use of proceeds, and earnings dilution from the divestiture.
