Like many aspects of life, growing or ending a business in New Jersey tends to be complex. There are many interests to protect and legal steps to follow in order for a merger or acquisition to be completed smoothly. At the end of the deal, both the buyer and the seller want to walk away feeling like they are getting the best deal possible. This often means coming to creative solutions and compromises to ensure everyone gets what they need out of the deal.
Compromises were undoubtedly a part of the recently announced merger between two publically traded banks, M&T Bank and Hudson City Bancorp. The two financial institutions have been known as rivals, with M&T Bank from Buffalo, New York, and Hudson City based in New Jersey. According to the banks, M&T Bank will buy Hudson City Bancorp for $3.7 billion.
Hudson City Bancorp stockholders are expected to benefit from the deal. They are set to receive as much as 40 percent of the deal in cash. Furthermore, they will get a 9 percent premium on the Aug. 24 closing price.
As expected, M&T Bank will also benefit from the merger. When the deal goes through, M&T Bank will pay only 82 percent of the tangible book value of Hudson City Bancorp. The bank is also expected to get an influx of cash from selling a portion of the $44 billion of assets belonging to Hudson City Bancorp.
For complex business transactions like this one to be completed successfully, complex planning, cooperation and negotiation is likely necessary. However, with the right help, these deals can be beneficial for all parties.
Source: Reuters, “Breakingviews: New York bank merger may be too good to be true,” Antony Currie, Aug. 27, 2012
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