Two months after saying it was bowing out of the merger game, M&T Bank Corp. is back in.
On Monday the Buffalo company announced an agreement to buy Premier National Bancorp of Lagrangeville, N.Y., for $342 million. The deal is slated to close in the first quarter of next year and would put M&T Bank in first place in deposit market share in seven fast-growing counties of New Yorks Hudson River valley, ahead of Bank of New York Co.
The buyer, with $22.8 billion of assets, already has 27 branches in the area. Premier, with $1.3 billion of deposits and $1.57 billion of assets, has 34.
M&T said in May that its $1 billion agreement its biggest ever to buy Keystone Financial Inc. would probably be its last merger deal for some time. The purchase, scheduled to close by yearend, would extend M&T into Pennsylvania, Maryland, and West Virginia and bring its branch count to 447 across four states.
Executives from M&T Bank, however, said Premier was too good to pass up. The price is $21 in cash or stock for each share of Premier, a 57% premium to Premiers closing stock price Friday. Shares of M&T Bank fell $3.25 Monday to close at $455.75. Premier rose $6.625, closing at $20.
Its a market that were intimately familiar with, so there is less of an exercise to integrate operations, said Michael Piemonte, a vice president in M&T Banks capital markets group who worked on the deal.
M&T Bank would not rule out more deals that would help it build its branch network in New York and neighboring states, Mr. Piemonte added.
Entering the Keystone markets opens a lot of opportunities in Pennsylvania, and it also opens up Maryland and West Virginia, he said. The company could also look to expand northeast, into Connecticut and Massachusetts, he said.
The company is one of a select few Wells Fargo & Co. has been another to brave the merger market in what has been an otherwise lackluster few months. Sellers are having a tough job, said Kevin Timmons, an analyst at First Albany Corp. They are getting less than what they might have gotten a couple of years ago.
New Yorks capital, Albany, could be next for M&T Bank, which aims to be the dominant deposit-taking institution in each of its local markets but has yet to achieve that status in Albany. However, a wave of deals across the citys biggest banking companies has driven prices above what M&T might be willing to pay.
Late last month Ambanc Holding Co. extended its offer to acquire Cohoes Bancorp Inc. for $120 million in cash in an attempt to foil Cohoes plan to merge with Hudson River Bancorp Inc. Cohoes has attracted another hostile bidder as well, Trustco Bank Corp., but has reiterated its desire to merge with Hudson River.
Meanwhile, Trustco in June offered to buy Hudson River Bank for $215 million, or $14 per share, if Hudson canceled its agreement to buy Cohoes.
Some analysts said M&T Bank is a logical white knight for Cohoes. Mr. Piemonte said Albany would be a desirable market for expansion, but there are not attractive opportunities at the moment.
Analysts said it had long been rumored that Premier Bank was a takeover candidate, and that M&T would be the one to take it over. In a statement Monday, Premier chairman T. Jefferson Cunningham 3d said the two companies have developed the same in-depth knowledge of the market and share a common commitment to community banking.
Mr. Cunningham is to join M&T Banks board of directors and will become chairman of the companys advisory board for the mid-Hudson Valley region. James L. Hoffman will continue as president of the region for M&T Bank.
The deal does involve some overlap. M&T said it would close about 10 branches some of its own and some of Premiers and that it would have $20 billion in pretax charges at the deals closing to pay for severance and other costs. Mr. Piemonte would not say how many people would lose their jobs.
M&T received legal advice from Arnold & Porter. Premier was advised by J.P. Morgan & Co.; Keefe, Bruyette & Woods; and Milbank Tweed Hadley & McCloy.