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A $3.9 billion merger between two commercial banks would once have been of only mild interest, but M&T Bank Corporation's agreement to buy Hudson City Bancorp Inc. for that sum is the largest such tie-up since PNC Financial Services Group Inc. struck a $5.2 billion deal to acquire National City Corporation in October 2008, according to Dealogic. That deal came at the height of the financial crisis, which along with subsequent regulatory and legal reform has put a stop to the large-scale consolidation of the U.S. banking sector.
Consolidation has gone on at a modest level since 2008, and M&T Bank has been an active participant in the process, buying Provident Bankshares Corporation for $401 million in 2009 and Wilmington Trust Corporation for $351 million two years later. M&T will pay $3.9 billion in cash and stock for Hudson City, whose shareholders will receive consideration worth $7.22 a share, a 12 percent premium over the target's closing price on August 24, the last trading day before the deal's announcement on August 27. The deal will allow M&T to expand its branch network in New Jersey, New York, and Connecticut. Hudson City was forced to seek a sale because of the negative effect of falling interest rates on the bank.
M&T and Hudson City hope to close the deal in the second quarter of 2013 pending approvals from regulators and approvals by both sets of shareholders.
For acquiror M&T Bank Corporation (Buffalo)
General counsel Drew Pfirrman and deputy general counsel Brian Yoshida.
Corporate: Edward Herlihy, Richard Kim, Lawrence Makow, counsel David Adlerstein, and associates Justin Rosenberg and Octavian Timaru. Executive compensation and benefits: Jeannemarie O'Brien and associate Adam Kaminsky. Tax: Joshua Holmes. (All are in New York.) Wachtell represented Allfirst Financial Inc. when Allied Irish Banks p.l.c. sold it to M&T in 2002 and advised M&T on the Provident Bankshares and Wilmington Trust deals. The firm also advised PNC on the National City deal.
For target Hudson City Bancorp Inc. (Paramus, New Jersey)
Corporate: H. Rodgin Cohen, C. Andrew Gerlach, and associates Jonathan Avidor, Michael Baxter, Michael Gorenstein, Benjamin Hutten, Michael Lewis, Steven Mungovan, Abigail Yevnin, and Daniel Zharkovsky. Tax: David Spitzer and associate Kevin Salinger. Executive compensation and benefits: Matthew Friestedt, special counsel Lawrence Pasini and Henrik Patel, and associates Michael Applebaum and Allison Macdonald. Environmental: special counsel Matthew Brennan. Intellectual property: special counsel Spencer Simon. (All are in New York except for Palo Altobased Simon.) The deal was S&C's first assignment for Hudson City. The firm represented National City on the PNC deal and Provident in its sale to M&T.