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August 19, 2010

NewAlliance Bank to be acquired by Niagara Financial Group

NewAlliance Bancshares, one of Connecticut's largest in-state lenders has been acquired by New York-based Niagara Financial Group, a deal that will create one of the largest 25 banks in the United States.

The merger of New Haven-based NewAlliance Bancshares, parent to NewAlliance Bank, into First Niagara will create a banking behemoth with more than $29 billion in assets. It also means the NewAlliance's orange and blue brand will disappear in the state.

As part of the deal, which is valued at $1.5 billion, NewAlliance's 88 branches, including one recently opened in downtown Hartford, are expected to be converted and rebranded as First Niagara locations.

Currently, First Niagara, which is based in Buffalo, serves communities across Upstate New York and Pennsylvania.

NewAlliance, which employs 1,200 people, has $8.7 billion in assets, including $4.9 billion in loans, as well as $5.1 billion in deposits. Its 88 branches serve eight counties from Greenwich to Springfield, Mass.  

The combined bank will have more than $29 billion in assets, including more than $14 billion in loans, as well as $18 billion in deposits.

NewAlliance's 195 Church Street headquarters in New Haven is slated to become First Niagara's New England Regional Market Center. Operational and philanthropic decision making will be made by local leaders based in New Haven.

Additionally, three NewAlliance directors, to be named in the months ahead, will be joining the board of First Niagara at transaction closing, increasing the total number of directors from nine to 12.

The deal is exepceted to close early in the second quarter of 2011, subject to approvals from regulators, First Niagara and NewAlliance shareholders.

"We are very proud that NewAlliance's exceptional balance sheet, credit quality and overall franchise strength enabled us to put a deal together that allows our shareholders to participate in a tremendous long-term growth opportunity, while also providing them immediate value," NewAlliance Chairman, President and CEO Peyton Patterson said. "Both NewAlliance and First Niagara have been recognized as national standouts when so many other banks are struggling. In combination, we will be creating a super-regional powerhouse and accelerating our potential in ways that we couldn't individually."

John R. Koelmel, president and CEO of First Niagara, said NewAlliance's competitive position, talented team and extensive branch network will serve as the foundation for the Buffalo-based bank's growth in New England.

"We and NewAlliance share many strategic and cultural strengths, and by joining forces with them and their talented leadership team, we add another attractive and well-positioned franchise with tremendous upside potential in a region with very strong demographics," Koelmel said.

The merger will be a cash-and-stock transaction.

Under the terms of the agreement, each NewAlliance stockholder will receive either 1.10 shares of First Niagara stock, cash, or a combination thereof.

The cash price will remain fixed while the value of the stock consideration will likely change prior to closing due to fluctuations in the price of FNFG stock.

As of yesterday's close, the approximate blended value of the stock and cash consideration is $14.09 per share and represents a premium of approximately 24 percent based on NewAlliance's closing price of $11.36, and a premium of about 19 percent over NewAlliance's 52-week average closing price, on August 18.

At transaction closing, First Niagara will also contribute an additional $7.5 million to its foundation to support funding for not-for-profit, charitable organizations in the communities served by NewAlliance.

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