Valued at nearly $3.7bn, the transaction is expected to be immediately accretive to the combined company’s capital ratios, capital generation and tangible book value per share, as well as its GAAP and operating earnings per share, the bank said.
According to the merger agreement, each Hudson City share will receive consideration valued at 0.08403 of an M&T share in the form of either M&T stock or cash, based upon the election of each Hudson City shareholder, subject to proration as specified in the merger agreement (which provides for an aggregate split of total consideration of 60% common stock of M&T and 40% cash).
Hudson City chairman and CEO Ronald Hermance, Jr. said this merger creates tremendous opportunities to build on the successes that each company has achieved individually in its own markets.
"As we combine Hudson City’s attractive retail network with M&T’s full service commercial banking suite, our stakeholders will participate in the growth of one of the nation’s strongest and most successful banking franchises," Hermance, Jr. added.
Upon the completion of the deal, M&T will get Hudson City’s network of 135 branch offices, which are located in New Jersey (97 branches), downstate New York (29 branches) and Fairfield County, Connecticut (nine branches).
The integrated network of 870 branches will stretch from Connecticut to Virginia and M&T anticipates to gain nearly $25bn in deposits and $28bn in loans from the merger (before acquisition accounting adjustments).
The acquirer said that after the deal is completed, M&T expects to repay almost $13bn of Hudson City’s long-term borrowings by liquidating its comparably sized investment portfolio.
As part of the merger agreement, Hermance will be named to the boards of directors of M&T and its principal banking subsidiary, M&T Bank.
JP Morgan offered financial advice to Hudson City and Sullivan & Cromwell served as its legal adviser, while Evercore Partners rendered a fairness opinion to M&T pertaining to the transaction, and Wachtell, Lipton, Rosen & Katz provided legal advice.
