NewAlliance Bancshares (NAL) advanced 17 percent to $13.25, the most intraday since September 2008. The Connecticut-based lender said Thursday it agreed to be bought by First Niagara Financial Group Inc. (FNFG) for about $1.5 billion. The merger, which values NewAlliance at $14.09 per share, based on Wednesday’s closing share price, will be a cash-and-stock transaction creating a top-25 U.S. bank with nearly $30 billion in assets, including more than $14 billion in loans, as well as $18 billion in deposits.
NewAlliance has 88 branches that serve eight counties from Greenwich, Connecticut to Springfield, Massachusetts. They would be added to First Niagara’s current network of 255 branches, which has a working force of about 3,800 employees operating in upstate New York and parts of Pennsylvania.
The banks said NewAlliance shareholders would have the option of exchanging each of their shares for 1.1 First Niagara shares, cash or a combination of stock and cash. The deal, however, consists of 86 percent stock and 14% in cash, subject to election and allocation procedures, the banks said in a statement.
The boards of directors of both companies have unanimously approved the transaction and expect the deal to close in the 2Q’11, subject to regulatory approval and other customary conditions.
Shares of NewAlliance were up by 13.29% to $12.87 in midday trading. First Niagara slid 6.10% to $12.01.