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.
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Jon C. Ogg
December 19, 2008