KeyCorp Agrees to Buy First Niagara Financial For $4.1 Bln
Nov 01 2015
KeyCorp's deal for First Niagara resolves some cost issues for the smaller regional bank. The acquisition will boost KeyCorp's earnings per share by 5 percent in 2018 and cut costs by $400 million, the bank said. Presently the company Insiders own 0.9% of First Niagara Financial Group Inc. shares according to the proxy statements.
It is one of the biggest bank tie-ups of the year and further solidifies 2015 as the biggest year for bank deals since the financial crisis. "Our leadership is committed to telling employees what they know when they know it.
In fact, next week, Beth Mooney and Gary Crosby (the CEOs of KeyBank and First Niagara) will be in several New York markets to meet with employees and talk with them about this agreement".
First Niagara's stock was trading nearly flat at $10.40 on Friday, while KeyCorp was down 6.7 percent at $12.49.
The combined bank will have assets of $135 billion.
Key Corp. of Cleveland, Ohio, has announced plans to buy First Niagara Bank.
In a report last week, Schultheis had noted that, even though First Niagara was widely known to be for sale, the bank faced a shortage of likely buyers, and had been upgrading its technology and boosting loan growth as if it planned to stay in business. But investors became concerned over the deal's $1 billion price tag and the fact that about half the branches involved had to be sold off due to federal regulations.
The deal could value Buffalo, N.Y.-based First Niagara at a modest premium to its market capitalization of just under $4 billion, the people said. First Niagara has 390 branches in New York, Pennsylvania, Massachusetts and Connecticut.
In conjunction with the closing of the transaction, three members of the First Niagara Board of Directors are expected to join the KeyCorp Board, which will be expanded accordingly.