M&T ends M&A drought with $7.6B deal for People's United

M&T Bank in Buffalo, N.Y., has agreed to buy People’s United Financial in Bridgeport, Conn.

The $143 billion-asset M&T said in a press release Monday that it will buy the $63 billion-asset People’s United for $7.6 billion in stock. The deal, which is expected to close in the fourth quarter, priced People’s United at 164% of its tangible book value.

Based on the value, the deal is the third-biggest bank merger announced in the last two years. The only deals to surpass the price over that time are PNC Financial Services Group’s agreement to buy BBVA Bancshares and the merger of BB&T and SunTrust Banks that created Truist Financial.

The merger — the first for M&T since it bought Hudson City Bancorp in November 2015 — would create a bank with more than 1,100 branches and roughly $200 billion of assets. The footprint would stretch from Maine to Virginia.

People’s United had been an aggressive acquirer in recent years, buying Suffolk Bancorp in Riverhead, N.Y., in 2017 and BSB Bancorp in Belmont, Mass., and United Financial in Hartford, Conn., in 2019. The company spent nearly $1.5 billion on those acquisitions.

"In People's United, we have found a partner with an equally long history of serving and supporting customers, businesses and communities," René Jones, M&T’s chairman and CEO, said in the release.

"Combining our common legacies and our complementary footprints will strengthen our ability to serve our communities and customers, and provide solutions that make a difference in people's lives,” Jones added.

M&T said it expects the deal will be immediately accretive to its tangible book value per share. The acquisition should be 10% to 12% accretive to M&T's 2023 earnings per share in 2023, including planned cost cuts.

M&T said it plans to cut about $330 million in annual noninterest expenses, though the savings include People’s United’s pre-existing plan to close branches inside Stop & Shop supermarkets in New York and Connecticut. The company expects to incur $740 million in merger-related expenses.

Five People’s United directors, including CEO Jack Barnes, are to join M&T's board.

Lazard and Sullivan & Cromwell advised M&T. Keefe, Bruyette & Woods, J.P. Morgan Securities and Simpson Thacher & Bartlett advised People's United.