LONDON (dpa-AFX) - First Niagara Bank N.A., a subsidiary of First Niagara Financial Group Inc. (FNFG), said Sunday it has agreed to acquire 195 Upstate New York and Connecticut branches and $15.0 billion of deposits from HSBC Bank USA, N.A., a unit of HSBC Holdings plc (HBC, HSBA.L) for a total consideration of about $1 billion.
The transaction includes six branches each in Westchester County and southern Connecticut. It also includes $2.8 billion of small business, residential mortgage and consumer loans, as well as $4.3 billion of assets under management.
With this acquistion, First Niagara will strengthen its presence in Upstate New York banking, nearly doubling its number of branches in the state to more than 200 and a greater than 20% deposit share across the region.
Upon completion of the transaction, First Niagara expects to have about $38 billion in assets, $30 billion in deposits and 450 branches across Upstate New York, Connecticut, Massachusetts and Pennsylvania.
Under the deal, First Niagara has agreed to pay a consideration equal to a premium of 6.67% of the deposits to be transferred on closing. Based on 31 May 2011 figures, the consideration would represent approximately US$1.0 billion.
The transaction is expected to be completed early next year, subject to regulatory approval and customary closing conditions.
The acquisition is expected to be accretive to First Niagara's operating earnings per share, excluding transaction expenses, by 10% to 11% in 2012 and 11% to 12% in 2013.
First Niagara expects to raise about $750 million to $800 million in common stock and $350 million to $400 million in debt prior to transaction closing.
Meanwhile, First Niagara expects to divest certain branches in selected locations that are outside its strategic focus, as well as in Western New York as expected to be required pending the outcome of the customary antitrust review.
With the acquisition, First Niagara expects to employ more than 4,000 New Yorkers by this time next year and upwards of 6,500 employees across Pennsylvania, New England and the Empire State.
Most of the 1,900 people currently employed in the 195 branches that are part of the transaction announced today are expected to be retained by First Niagara and other financial institutions that purchase certain branches that the company expects to divest.
In addition to the sale of the retail branches to First Niagara, HSBC Bank has decided to consolidate about 13 branches located in Connecticut and New Jersey into nearby HSBC branches by the first quarter of 2012, subject to regulatory approval.
First Niagara closed Friday's regular trading at $12.25, down 4 cents on a volume of 3.16 million shares on the Nasdaq.
HSBC finished Friday's regular trading at $48.87, down 33 cents on a volume of 2.69 million shares on the NYSE.
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