M&T Bank Corp. agreed to buy People’s United Financial Inc. in an all-stock deal valued at about $7.6 billion, joining a string of U.S. regional banks bulking up in recent months to fend off competition from industry giants.
M&T Chief Executive Officer Rene Jones will lead the combined company, which will have about $200 billion in assets and a network of more than 1,100 branches spanning 12 states from Maine to Virginia, M&T said in a statement.
“Combining our common legacies and our complementary footprints will strengthen our ability to serve our communities and customers, and provide solutions that make a difference in people’s lives,” Jones said in the statement.
The tie-up between Buffalo, New York-based M&T and People’s United marks the latest deal among regional banks as they seek size to counter low interest rates, tepid loan demand and the need for greater technology spending. The acquisitions are aimed at helping smaller firms compete against giants such as JPMorgan Chase & Co., which is moving into new states and spending billions annually on digital offerings.
Among the recent tie-ups: Huntington Bancshares Inc. agreed to buy TCF Financial Corp. for about $6 billion in December, and PNC Financial Services Group Inc. said in November it would pay $11.6 billion for Banco Bilbao Vizcaya Argentaria SA’s banking operations in the U.S., last year’s largest U.S. banking deal.
U.S. lenders approaching an asset size of $250 billion are subject to greater regulatory scrutiny, another reason to combine in order to spread compliance costs.
People’s United investors will receive 0.118 of a share of M&T common stock for each of their shares, according to the statement. The transaction is expected to be completed in the fourth quarter.
M&T said the transaction will immediately start adding to its tangible book value per share. The deal will be 10% to 12% accretive to earnings per share in 2023, reflecting estimated annual cost savings of about $330 million, the company said.
People’s United, based in Bridgeport, Connecticut, climbed 9.2% to $17.13 at 7:46 a.m. in early New York trading.
M&T shares advanced 18% this year through Friday, giving it a $19.2 billion market value. People’s United jumped 21%, valuing the company at $6.7 billion. Both stocks outperformed the 9.6% gain in the S&P 500 Financials Index.