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New York Community Bancorp has agreed to buy Astoria Financial for about $2 billion in cash and stock, combining two of the largest New York-area banks to create an institution with about $64 billion in total assets.
October 29 -
The speculation is over and a deal has been announced. How will the regulatory process play out? What will the branch network look like? These questions are more are worth asking as New York Community takes the next few months to shore up support for this $2 billion acquisition.
October 29 -
New York Community has long wanted a deal to push it over $50 billion of assets. While Astoria accomplishes that, it does little to diversify New York Community's geography or reduce its reliance on multifamily lending.
October 29
New York Community Bancorp in Westbury had stiff competition as it angled to buy Astoria Financial in Lake Success, N.Y.
The $49 billion-asset New York Community
Astoria hired Sandler O'Neill last summer to solicit interest from possible acquirers, a recent filing tied to the New York Community deal disclosed. Around that time, Basswood Capital Management went public with an effort to push Astoria to
Four financial institutions, by late September, submitted nonbinding indications of interest that involved stock transactions. New York Community's proposal had the highest ceiling, valuing Astoria at up to $19 a share. One of the original suitors quickly backed off.
One of the other financial institutions, like New York Community, was big enough that it had started making plans for crossing $50 billion in assets and becoming a systemically important financial institution, the filing said. That institution, which "expressed reservations about proceeding with any potential transaction in the near term, instead preferring to pursue a transaction at the end of 2015," eventually dropped out of the bidding process.
That left New York Community and another, unnamed institution to compete for Astoria.
In late October, Astoria's board met with Joseph Ficalora, New York Community's chief executive, and executives at the other institution. The filing notes that Astoria's board was worried that Ficalora's
Astoria's management believed, however, that merging with the other institution had more execution risk and that the other suitor "could face obstacles in achieving synergies due to the higher relative cost of integration." New York Community "generally seemed in a better position to promptly execute and complete a transaction," and "its rapid and efficient work in the process provided evidence of this preparedness," the filing said.
Each financial institution was pushed to increase their offers. New York Community added a cash component, increasing the total value by about 3%, to nearly $2 billion, or $19.29 a share. The other institution increased the fixed exchange ratio to raise its offer to $1.98 billion, or $19.24 a share.
Ralph Palleschi, Astoria's chairman, solicited comments from the company's outside directors on their view of the proposals. "The outside directors unanimously concluded that … NYCB's proposal had a higher certainty of completion and therefore was in the best interests of Astoria common stockholders," the filing said.
The merger with New York Community was announced on Oct. 29.
