M&T Bank to acquire People’s United in a share purchase transaction

M&T Bank (NYSE: MTB) plans to acquire People’s United Financial (NASDAQ: PBCT) in another big problem among consolidating regional banks.

It will be an all-stock transaction valued at $ 7.6 billion, valuing People’s United shares at $ 17.70, or 164% of tangible book value. The purchase price represents a premium of almost 13% over the People’s share closing price last Friday.

The deal will bring together two of the largest regional banks headquartered in the Northeast (M&T is based in Buffalo, New York, and People’s United in Bridgeport, Connecticut) and create a bank with approximately $ 200 billion in assets. .

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The integration of People’s United will extend M&T’s footprint from the mid-Atlantic to New England.

“The combination of our common legacies and complementary footprints will strengthen our ability to serve our communities and our customers, and deliver solutions that make a difference in people’s lives,” said René Jones, CEO of M&T, who will lead the amalgamated company.

Five current members of the People’s United Board of Directors will join the M&T Board of Directors after the transaction closes.

The deal will have an immediate accretive effect on the tangible book value of M&T and will also have an accretion effect on earnings in 2022 of 7% to 8%. This means that the profits of the combined company will be greater than the combined profits of the two companies on a stand-alone basis.

M&T expects to be able to withdraw 30% of People’s United’s annual spending base, including People’s planned closures of its Stop & Shop branches, which has yet to happen.

The deal is expected to be finalized in the fourth quarter of the year. People’s United shares rose nearly 11% at one point this morning, while M&T shares traded higher to open the day as well.

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