M&T Bank Corp. has agreed to its largest acquisition to date by buying Hudson City Bancorp for about $3.7 billion. It will pick up 135 branches including 97 in New Jersey becoming the fourth-largest lender in the state by deposits. The acquisition is expected to add approximately 200 jobs locally.
Under terms of the agreement, each Hudson City shareholder will receive 0.08403 of an M&T share in the form of either M&T stock or cash, the companies said today in a statement. The deal values Hudson City about 12 percent higher than the company's closing price on the Nasdaq Stock Market on Aug. 24.
The Buffalo, New York-based company will add $25 billion in deposits and $28 billion in loans, according to the statement. The acquisition is the biggest takeover of a U.S. bank announced this year, according to data compiled by Bloomberg, and includes branches in New York and Connecticut.
"It's a very attractive transaction for M&T right off the bat," said Joseph Fenech, an analyst at Sandler O'Neill & Partners LP in New York who rates M&T shares "buy." "If you look up and down the M&T franchise from upstate New York to Virginia, two of the holes were Long Island and New Jersey."
Hudson City climbed 16 percent to $7.48 at 10 a.m. in New York, while M&T gained 4.9 percent to $90.09, the highest since April 2011. Hudson City advanced 3 percent this year through Aug. 24, while M&T rose 12 percent. That compares with a 20 percent increase in the 24-company KBW Bank Index.
The takeover of Hudson City creates a "comprehensive community-banking franchise that provides a full range of checking and savings accounts, debit and credit cards, home- equity loans and other lending options, plus small-business and commercial-banking services," M&T Chief Executive Officer Robert G. Wilmers, 78, said in the statement.
M&T expanded in 2011, when it completed the purchase of Wilmington Trust Corp. for more than $400 million to build market share in Delaware and expand wealth management and corporate services to boost fee income. In 2009, M&T bought Provident Bankshares Corp. to add deposits in the mid-Atlantic region.
"I want to congratulate M&T Bank Corp. and its Chairman of the Board & CEO Bob Wilmers on today's acquisition of Hudson City Bancorp Inc.," said Governor Cuomo in a statement. "The acquisition of Hudson City Bancorp expands on the wide array of private sector investment opportunities that bolster Western New York as a world class hub for commerce and economic activity. This acquisition is a sign that a key industry cluster in Western New York--financial services--is strong and continues to grow and that major financial institutions can come to Western New York to thrive."
The acquisition will create jobs locally and could be good news for the local commercial real estate market.
According to Chet Bridger, M&T's Vice President of Corporate Communications, the bank currently has 3,121 employees working downtown in bank-owned M&T Plaza and M&T Center, and in leased space in Lafayette Court and 285 Delaware Avenue. An additional 1,300 employees are in Amherst facilities on Commerce Drive, Wehrle Drive and John Glenn Drive, and hundreds of other employees are spread across retail bank branches in Western New York.
"This acquisition will create about 200 new jobs in different departments spread across those main operating buildings over the course of the next one to two years," says Bridger.
Using a conservative standard of 200 sq.ft. of office space per employee, those new employees will fill 40,000 sq.ft. of space, or roughly two floors of a downtown building.