KeyCorp hit fresh political resistance in New York to its $4.1 billion acquisition of First Niagara Financial Group Inc., with Governor Andrew Cuomo pushing federal regulators on Wednesday to block the deal. Shares of both companies fell.
A takeover "would have a devastating impact on consumers and businesses in Upstate New York, and I urge the federal government to reject the application," Cuomo wrote in a letter posted on his website. "This proposal would reduce retail banking competition, limit consumer access and convenience, and ultimately eliminate jobs throughout the region."
David Lanzillo, a spokesman for First Niagara, declined to comment. A KeyCorp spokesman didn't immediately respond to messages.
KeyCorp, based in Cleveland, agreed in October to take over Buffalo, New York-based First Niagara to expand in the U.S. Northeast. In December, Senator Charles E. Schumer of New York pressed regulators to give people more time to comment on the deal, citing his concerns about its economic impact on the region.
First Niagara's stock fell 1.7 percent to $9.16 after Cuomo weighed in Wednesday. KeyCorp slipped 1.1 percent to $10.52.
First Niagara had said in a regulatory filing earlier in the day that if the merger falls apart the company still faces costs connected to the deal, including a potential $137.5 million termination fee. The bank might not be able to find another buyer "willing to offer equivalent or more attractive consideration" than what KeyCorp agreed to pay, it said.