BUFFALO, N.Y., Mon Aug 27, 2012 –M&T Bank Corp. said it would buy Hudson City Bancorp Inc. in a stock and cash deal worth $3.7 billion, expanding its franchise in the eastern United States and taking a step toward the long-awaited consolidation of regional banks.
M&T intends to shrink Hudson City’s $43.6 billion balance sheet by roughly a third as it liquidates an investment portfolio held by the Paramus, New Jersey-based bank, M&T said on Monday.
The deal quickly won the endorsement of the market. Hudson City shares rose 16.3 percent in early trading to $7.49, and M&T stock rose 4.7 percent.
For Hudson City shareholders, the market move sweetened a 12 percent premium to the deal struck by the companies. Based on the Friday closing price of M&T stock, the deal was worth $7.22 for each Hudson City share.
M&T has $80.8 billion in assets and
said it expects to gain about $25 billion in deposits and $28 billion in loans from the merger, before adjustments.
The transaction is expected to immediately boost the combined company’s capital ratios, as well as its GAAP and operating earnings per share.
Hudson City Chairman and CEO Ronald Hermance will join the board of M&T after the closing of the deal, which is subject to approval by regulators and by shareholders from both companies.
M&T will acquire Hudson City’s network of 135 branch offices; 97 are located in New Jersey, with the rest in downstate New York and in Fairfield County, Connecticut. The companies said there is “very little overlap” with M&T’s branches.