M&T Bank (MTB) to Take Over Hudson City Bancorp (HCBK) in $3.7B All-Stock Deal

August 27, 2012 8:10 AM EDT
Hudson City Bancorp, Inc. (Nasdaq: HCBK) and M&T Bank Corporation (NYSE: MTB) ("M&T") announced today that they have entered into a definitive agreement under which Hudson City will merge into a subsidiary of M&T, expanding the premier community banking franchise in the eastern United States.

Under terms of the 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). Based on the closing price of M&T stock on August 24, 2012, the transaction is valued at approximately $3.7 billion. 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.

M&T will acquire 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 (9 branches). M&T's existing branch network is adjacent to Hudson City's franchise, with very little overlap. The combined network of 870 branches will stretch from Connecticut to Virginia.

M&T expects to gain approximately $25 billion in deposits and $28 billion in loans from the merger (before acquisition accounting adjustments), giving M&T the fourth largest deposit share in New Jersey.

The merger has been approved by the boards of directors of each company, and is subject to certain conditions, including regulatory approvals and approval by M&T's and Hudson City's common shareholders. After the transaction is completed, Mr. Hermance will be appointed to the boards of directors of M&T and its principal banking subsidiary, M&T Bank.

J.P. Morganacted as financial adviser to Hudson City and rendered a fairness opinion in connection with the transaction, and Sullivan & Cromwell LLP acted as its legal adviser. Evercore Partners rendered a fairness opinion to M&T in connection with the transaction, and Wachtell, Lipton, Rosen & Katz acted as its legal adviser.

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