KeyCorp and First Niagara Financial Group announced Friday morning that they have reached a definitive agreement for KeyCorp to acquire First Niagara in a cash-and-stock transaction valued at some $4.1 billion.
With roughly $135 billion in assets, the combined bank will be the 13th largest commercial bank headquartered in the United States, the banks said. The acquisition will make KeyCorp a leading bank in Upstate New York, with a strong market presence in Buffalo, Albany, Syracuse and Rochester.
Buffalo-based First Niagara has $39 billion in assets and $29 billion in deposits, with 394 banking offices in New York, Pennsylvania, Connecticut and Massachusetts.
In the Rochester market, the deal would combine the No. 6 bank in term of market share, First Niagara, and No. 7, KeyBank N.A. First Niagara’s share is 8.2 percent; and KeyBank’s is 6.1 percent, according to the Rochester Business Journal’s most recent list of banks.
Under the terms of the agreement, which was approved unanimously by the boards of each company, First Niagara shareholders will receive 0.68 KeyCorp shares and $2.30 in cash for each First Niagara common share. The per-share consideration is valued at $11.40 a share based on the closing price of KeyCorp common stock on Oct. 29.
Three First Niagara board of directors are expected to join the KeyCorp board.
“Key and First Niagara are a powerful combination, driven by a shared commitment to the clients and to the communities we serve,” KeyCorp chairman and CEO Beth Mooney said in a statement. “This transformational opportunity will bring compelling and complementary capabilities to our shared 3 million clients, while driving meaningful synergies and enhancing shareholder value.”
Upon completion of the transaction, the combined company will have some $99.8 billion in deposits, $83.6 billion in loans and 1,366 branches across 15 states. The combined company will have approximately $135 billion of pro forma assets providing increased operating leverage to deliver improved financial performance, officials said. Shareholders of both companies will benefit from annual cost savings in excess of $400 million.
The acquisition is subject to customary closing conditions, including regulatory approvals and approval by KeyCorp and First Niagara shareholders. The transaction is expected to close in the third quarter of 2016.
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