KeyCorp to acquire First Niagara Financial Group

Staff report

CLEVELAND

Cleveland-based KeyCorp and First Niagara Financial Group announced Friday that they have entered into a definitive agreement for KeyCorp to acquire First Niagara in a cash-and-stock transaction valued at about $4.1 billion.

First Niagara, based in Buffalo, N.Y., has $39 billion in assets and $29 billion in deposits and 394 banking offices in New York, Pennsylvania, Connecticut and Massachusetts.

With about $135 billion of assets, the combined bank will be the 13th-largest commercial bank based in the U.S.

The combination will create a leading regional bank with enhanced scale to serve 3 million clients across diverse markets in the Northeast, mid-Atlantic, Midwest and Pacific Northwest. The acquisition will make KeyCorp a leading bank in upstate New York, with a strong market presence in Buffalo, Albany, Syracuse and Rochester.

KeyCorp also will expand its operations to markets throughout Pennsylvania, Massachusetts and Connecticut.

First Niagara shareholders will receive 0.68 KeyCorp shares and $2.30 in cash for each First Niagara common share. The per-share consideration is valued at $11.40 based on the closing price of KeyCorp common stock Oct. 29.

In conjunction with the closing of the transaction, three members of the First Niagara Board of directors are expected to join the KeyCorp Board, which will be expanded accordingly.

KeyCorp expects the acquisition to be accretive to earnings per share in 2017, excluding one-time charges.

The acquisition is subject to customary closing conditions, including regulatory approvals and approval by KeyCorp and First Niagara shareholders. The transaction is expected to close in the third quarter of 2016.