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M&T Bank Strikes Deal Worth of $7.6B With People's United
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M&T Bank Corporation (MTB - Free Report) has agreed to acquire People’s United Financial Inc. in an all-stock merger deal worth $7.6 billion. The transaction is expected to close in the fourth quarter of 2021, subject to necessary approvals.
Post the deal completion, the combined company will have about $200 billion in assets and a network of more than 1,100 branches and more than 2,000 ATMs spread across 12 states from Maine to Virginia and the District of Columbia.
Since the announcement, shares of both M&T Bank and People's United have been moving north.
Deal Details
Per the agreed terms, People's United shareholders are entitled to receive 0.118 of a share of M&T Bank common stock for each People's United share they own. Thus, People's United shareholders will own nearly 28% of the combined company.
Also, People's United's current headquarters in Bridgeport, CT, will become the New England regional headquarters for M&T Bank.
René Jones, Chairman and CEO of M&T Bank, will continue to serve as Chairman and CEO of the combined company. Jack Barnes, Kirk Walters and three other current members of the board of directors of People's United will join M&T Bank's board of directors.
Benefits of Deal
M&T Bank expects the deal to be instantly accretive to its tangible book value per share. Also, the merger will result in M&T Bank’s earnings accretion of 10-12% in 2023, suggesting estimated annual cost synergies of $330 million.
Notably, the merger will create a diversified, community-focused banking franchise in the Northeast and Mid-Atlantic regions. Also, a complementary top-tier deposit share in core markets is another positive factor. Moreover, footprint spread across an economically diverse region, which accounts for more than 20% of the U.S. population and more than 25% of U.S. GDP, is expected to bode well for the combined company’s long-term growth prospects.
Our Take
In the current scenario, banks are moving toward consolidation to dodge the heightened costs of regulatory compliance and increased investments in technology in a bid to be competitive. Furthermore, the current interest-rate scenario and other economic challenges following the pandemic have taken a toll on banks’ profitability.
The merger between M&T Bank and People’s United is expected to lead to increased growth prospects and the creation of shareholder value.
Notably, shares of M&T Bank and People’s United have rallied 46.7% and 67%, respectively, over the past six months.
Last December, Huntington Bancshares (HBAN - Free Report) entered an all-stock acquisition deal with Detroit-based TCF Financial , per which the former will merge with the latter with a total market value of about $22 billion.
Also, in one of the biggest banking deals in over a decade, BB&T Corp and SunTrust Banks merged to form Truist Financial Corp. The “merger of equals” all-stock deal, announced in February 2019, created the sixth-largest commercial bank in the United States (in terms of assets and deposits).
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M&T Bank Strikes Deal Worth of $7.6B With People's United
M&T Bank Corporation (MTB - Free Report) has agreed to acquire People’s United Financial Inc. in an all-stock merger deal worth $7.6 billion. The transaction is expected to close in the fourth quarter of 2021, subject to necessary approvals.
Post the deal completion, the combined company will have about $200 billion in assets and a network of more than 1,100 branches and more than 2,000 ATMs spread across 12 states from Maine to Virginia and the District of Columbia.
Since the announcement, shares of both M&T Bank and People's United have been moving north.
Deal Details
Per the agreed terms, People's United shareholders are entitled to receive 0.118 of a share of M&T Bank common stock for each People's United share they own. Thus, People's United shareholders will own nearly 28% of the combined company.
Also, People's United's current headquarters in Bridgeport, CT, will become the New England regional headquarters for M&T Bank.
René Jones, Chairman and CEO of M&T Bank, will continue to serve as Chairman and CEO of the combined company. Jack Barnes, Kirk Walters and three other current members of the board of directors of People's United will join M&T Bank's board of directors.
Benefits of Deal
M&T Bank expects the deal to be instantly accretive to its tangible book value per share. Also, the merger will result in M&T Bank’s earnings accretion of 10-12% in 2023, suggesting estimated annual cost synergies of $330 million.
Notably, the merger will create a diversified, community-focused banking franchise in the Northeast and Mid-Atlantic regions. Also, a complementary top-tier deposit share in core markets is another positive factor. Moreover, footprint spread across an economically diverse region, which accounts for more than 20% of the U.S. population and more than 25% of U.S. GDP, is expected to bode well for the combined company’s long-term growth prospects.
Our Take
In the current scenario, banks are moving toward consolidation to dodge the heightened costs of regulatory compliance and increased investments in technology in a bid to be competitive. Furthermore, the current interest-rate scenario and other economic challenges following the pandemic have taken a toll on banks’ profitability.
The merger between M&T Bank and People’s United is expected to lead to increased growth prospects and the creation of shareholder value.
Notably, shares of M&T Bank and People’s United have rallied 46.7% and 67%, respectively, over the past six months.
Currently, M&T Bank carries a Zacks Rank #2 (Buy), while People’s United sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Similar Moves
Last December, Huntington Bancshares (HBAN - Free Report) entered an all-stock acquisition deal with Detroit-based TCF Financial , per which the former will merge with the latter with a total market value of about $22 billion.
Also, in one of the biggest banking deals in over a decade, BB&T Corp and SunTrust Banks merged to form Truist Financial Corp. The “merger of equals” all-stock deal, announced in February 2019, created the sixth-largest commercial bank in the United States (in terms of assets and deposits).
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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