Few branches expected to close in People's United takeover
Officials with Buffalo's M&T Bank — now the presumptive buyer of Bridgeport-based People's United Bank — say layoffs and branch consolidations are not a major feature of their plan to combine the two lenders.
During a conference call with analysts Monday, M&T CFO Darren King said projected merger-related savings of $330 million will come mainly from new operational efficiencies, not rationalization of the chains' respective brick-and-mortar retail banking networks.
"There might be some overlap in some of the geographies with customer-facing folks, but what we really found was not a great degree of overlap in the customer bases," King said. "And so because of that we don't anticipate any changes, to speak of, to the folks that talk to customers. As we go into this, our No. 1 priority is protecting those relationships."
"We think this is more of a growth story than it is an expense-save issue," added M&T Chairman and CEO René Jones.
M&T on Monday announced it had entered an agreement to buy People's United Bank in a transaction valued at over $7 billion. If ultimately realized, the merger would create a regional retail banking giant with approximately $200 billion in assets and more than 1,100 branches spread out among 12 Northeast and Mid-Atlantic states.
Based on closing prices as of Friday, the all-stock transaction has an implied total value of $7.6 billion.
The boards of directors of both lenders have signed off on the deal, bank officials said, and People's United shareholders are set to receive 0.118 of a share of M&T stock for each share of People's United stock they currently own, bringing their collective ownership of the combined enterprise to 28%.
People's United's corporate headquarters in Bridgeport would become the New England regional headquarters of M&T.
M&T, which controls about $140 billion in assets, has more than 750 branch locations and over 1,800 ATMs in Connecticut, New York, New Jersey, Maryland, Delaware, Pennsylvania, Virginia, West Virginia, and Washington, D.C. Its presence in Connecticut is limited to Fairfield County, where it has operations in Bethel, Brookfield, Greenwich, Fairfield, Monroe, Norwalk, Ridgefield, and Stamford.
The company also operates Wilmington Trust, an investment management and private banking subsidiary based in Delaware.
The consolidation of M&T and People's United Bank, two of the Northeast's largest banking franchises, suggest that the era of regional bank consolidations — fueled by low interest rates and generally meager loan growth — is far from over.
In just the past three years, People's United has acquired First Connecticut Bancorp, the parent company of Farmington Bank, and longtime competitor United Bank, a deal that transformed the retail banking landscape in and around Hartford.
Other notable tie-ups in Connecticut include Berkshire Hills' takeover of Windham-based SI Financial Group and the acquisition of First Suffield Financial by PeoplesBank.
As is now the case for almost all large-scale mergers, lawyers were waiting to challenge the M&T-People's United pairing on the basis that the would-be partners have agreed to an unfair purchase price, to the detriment of shareholders.
"The merger agreement unreasonably limits competing bids for People's United by prohibiting solicitation of further bids, and imposing a termination penalty if People's United accepts a superior bid," wrote Wisconsin law firm Ademi LLP in a statement released Monday. "People's United insiders will receive millions of dollars as part of change of control arrangements. We are investigating the conduct of People's United's board of directors, and whether they are fulfilling their fiduciary duties to all shareholders and obtaining a fair and reasonable price for People's United."
Challenges such as Ademi's rarely make it to trial, and most are settled before the merger in question closes.
Zach cover all topics that fall under business. His coverage can include openings and closings of local businesses, trends in unemployment, details of developments from major companies and utilities, and investigating the impact of state politics and regulations on the private sector.
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