KeyCorp and First Niagara Financial entered into a definitive agreement under which KeyCorp will acquire First Niagara in a cash and stock transaction for total consideration valued at approximately $4.1 billion.
First Niagara, headquartered in Buffalo, NY, has $39 billion in assets and $29 billion in deposits and 394 banking offices in New York, Pennsylvania, Connecticut and Massachusetts. With approximately $135 billion of assets, the combined bank will be the 13th largest commercial bank headquartered in the U.S.
“Key and First Niagara are a powerful combination, driven by a shared commitment to the clients and to the communities we serve,” said KeyCorp chairman and CEO Beth Mooney. “This transformational opportunity will bring compelling and complementary capabilities to our shared 3 million clients, while driving meaningful synergies and enhancing shareholder value. KeyBank and First Niagara both have values-based cultures and a long-term commitment to and experience with the region.”
Under the terms of the agreement, which was unanimously approved by the boards of directors of each company, the merger consideration will be approximately $4.1 billion. First Niagara shareholders will receive 0.68 KeyCorp shares and $2.30 in cash for each First Niagara common share. The per share consideration is valued at $11.40 per share based on the closing price of KeyCorp common stock on October 29, 2015. 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.
“I am confident that the combination of First Niagara and Key will benefit our shareholders, customers and the communities we serve and will build off the great progress that the First Niagara team has made,” said Nathaniel D. Woodson, chairman of the board of directors of First Niagara. “We believe that this partnership provides significant value for our shareholders and allows them to participate in the upside potential of the combined Key and First Niagara.”
Morgan Stanley served as lead financial advisor and KeyBanc Capital Markets was also a financial advisor to KeyCorp. Simpson Thacher & Bartlett served as legal counsel.
J.P. Morgan Securities served as financial advisor to First Niagara, and Sullivan & Cromwell served as legal counsel.