A Bank Merger With M&T and Provident (MTB, PBKS)

Print Email

M&T Bank Corporation (NYSE: MTB) has agreed to acquire Provident Bankshares Corporation (NASDAQ: PBKS) for roughly $401 million in stock. 

On the surface, this is a huge premium.  Provident shareholders willreceive 0.171625 shares of M&T common stock in exchange for eachshare of Provident common stock.  Based on M&T’s closing stockprice of $61.18 on December 16, 2008, the deal is valued at $10.50 perProvident share.  The purchase price represents a 3.7% premium to coredeposits and 1.4x tangible book value.

M&T has $65.2 billion in assets, and has operations in theBaltimore-Washington metropolitan area. Provident is based in Baltimoreand has roughly $6.4 billion in assets.  M&T also expects to gainapproximately $4.6 billion in deposits and $4.3 billion in loans fromthe merger.

In addition, M&T willget to add 143 Provident branch offices and 198 ATMs located primarilyin Maryland and Virginia.  This will then add on to M&T’s existing177 branches and 545 ATMs in the same region. When combined withM&T’s existing Mid-Atlantic franchise, the merger will give M&Tthe second-largest deposit share in Maryland and will triple itspresence in Virginia.

Join our open email distribution list to hear about other mergers, Warren Buffett activities, IPO’s, secondary offerings, private placements, special situations, rumors, and more.

Jon C. Ogg
December 19, 2008