Updated to include earnings information, stock price change
Shareholders of Wilmington Trust will receive 0.051372 shares of the regional bank's common stock in exchange for the trust bank's stock, the companies said. M&T will acquire 48 branches in Delaware, giving M&T a total of 800 branches at closing. The deal is expected to be completed in mid-2011.
The deal is valued at roughly $3.84 per Wilmington Trust share, which represents 1x tangible book as of September 30. M&T anticipates that the deal will be accretive to GAAP and operating earnings per share in 2012 and estimates an internal rate of return on the investment above 20%, it said.M&T will also assume responsibility for Wilmington Trust's $330 million of preferred stock still held by the U.S. Treasury Department. Separately, Wilmington Trust also announced a third-quarter loss of $365.3 million. After dividends and accretion on Wilmington's preferred stock owned by the U.S. Treasury, the net loss available to common shareholders was $369.9 million, or $4.06 per share. Analysts, on average, expected a loss of 43 cents a share. Wilmington Trust said the primary causes of the loss were the continued deterioration in commercial credit quality, which resulted in a loan loss provision of $281.5 million, and income tax expense of $100.7 million, as the company established a valuation allowance on deferred tax assets. Wilmington shares plummeted 44% as investors likely perceive the deal as short changed. The stock was trading at roughly $4 shortly after the market opened. Wilmington Trust shares were falling last week amid rumors that the institution was looking for a buyer ahead of its quarterly earnings release. Shares closed on Friday at $7.09. The stock was already trading at $3.95 shortly before the market opened on Monday.
To contact the writer of this article, click here: Laurie Kulikowski. To submit a news tip, send an email to: email@example.com.
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