The boards of directors of Webster Financial and Sterling Bancorp unanimously approved a definitive agreement under which the two companies will combine in an all-stock merger of equals transaction with a total market value of approximately $10.3 billion.
Under the terms of the agreement, Sterling will merge into Webster and Sterling’s shareholders will receive a fixed exchange ratio of 0.463 of Webster shares for each share of Sterling stock they own. Following the closing of the transaction, Webster shareholders will own approximately 50.4% of the combined company and Sterling shareholders will own approximately 49.6% on a fully diluted basis.
The combined company will retain the Webster name, establish a new corporate headquarters in Stamford, CT, and have a continued multi-campus presence in the greater New York City area and Waterbury, CT.
“We are excited to combine the best of both companies to create an industry leader,” Jack L. Kopnisky, president and CEO of Sterling Bancorp, said. “Webster and Sterling have much in common: distinguished client service, diversity of revenue, funding sources and assets, and disciplined capital allocation. The increased capabilities and scale of our two organizations are attractive propositions for our clients, communities, shareholders and colleagues.”
“We are bringing together two high-performing organizations with strong cultural and business model alignment to create a powerhouse Northeast bank,” John R. Ciulla, chairman, president and CEO of Webster Financial, said. “This combination provides exceptional financial benefits and enables us to more aggressively invest in key businesses and activities to enhance value for our customers, our communities, our shareholders and our bankers.”
The combined company will have $63 billion in assets, $52 billion in deposits and $42 billion in loans. It also will have more than 200 financial centers in the Northeast market.
The combined company is projected to generate a ROAA of 1.4% and ROATCE of 17%. It also is projected to generate $440 million per year, or roughly $2.50 per share, of excess capital after organic growth and dividends, available for both capital investments and share repurchases.
Kopnisky will serve as executive chairman of the combined company for 24 months after closing and will continue in a consulting capacity for an additional 12 months thereafter. Ciulla will serve as president and CEO of the combined company until 24 months after closing, at which time he will become chairman, president and CEO.
The combined company’s executive management team will be comprised of executives from both companies, including Luis Massiani as COO and Glenn I. MacInnes as CFO.
The board of directors of the combined company will have 15 directors, consisting of eight directors from Webster and seven directors from Sterling, including Kopnisky and Ciulla.
William L. Atwell, who is currently a lead independent director for Webster, will serve as lead independent director for the combined company for 24 months after closing, after which the lead independent director will be a legacy Sterling director.
The merger is expected to close in Q4/21, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approval by the shareholders of each company.
J.P. Morgan Securities acted as lead financial advisor to Webster and rendered a fairness opinion to its board of directors. Piper Sandler also rendered a fairness opinion to Webster’s board. Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Webster.
Citigroup Global Markets acted as lead financial advisor to Sterling and rendered a fairness opinion to its board of directors. Keefe, Bruyette & Woods also rendered a fairness opinion to Sterling’s board. Squire Patton Boggs is serving as legal counsel to Sterling.
