This is one of the biggest bank deals of the year, the Wall Street Journal reports, and is further cementing 2015 as the biggest year for bank deals since the financial crisis.
As part of the deal, shareholders will receive 0.68 KeyCorp shares and $2.30 in cash for each First Niagara common share.
The deal is expected to close by the 2016 third quarter, the Journal added.
Bank deals are making a slow return as larger lenders look to become more efficient by growing and smaller banks that are struggling put themselves up for sale, the Journal noted.
Additionally, Golman Sachs upgraded its rating on First Niagara Financial to "neutral" from "sell" this morning. The upgrade was the result of the KeyCorp acquisition.
Separately, TheStreet Ratings team rates FIRST NIAGARA FINANCIAL GRP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate FIRST NIAGARA FINANCIAL GRP (FNFG) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, solid stock price performance, impressive record of earnings per share growth and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FNFG's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 106.6% when compared to the same quarter one year prior, rising from -$920.05 million to $60.48 million.
- Powered by its strong earnings growth of 105.66% and other important driving factors, this stock has surged by 41.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- FIRST NIAGARA FINANCIAL GRP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIRST NIAGARA FINANCIAL GRP swung to a loss, reporting -$2.11 versus $0.75 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus -$2.11).
- The gross profit margin for FIRST NIAGARA FINANCIAL GRP is currently very high, coming in at 85.47%. Regardless of FNFG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.80% trails the industry average.
- You can view the full analysis from the report here: FNFG