(Bloomberg) — Citizens Financial Group Inc. agreed to buy Investors Bancorp Inc. in a $3.5 billion deal that will give it a bigger presence in New York City and Philadelphia.
The cash and stock transaction is expected to be completed in the first half of next year, the banks said in a statement Wednesday. The purchase will give Citizens roughly $27 billion of assets, bringing its total above $200 billion.
Citizens, based in Providence, Rhode Island, is already among the 20 biggest U.S. banks and has been growing through acquisitions. Earlier this year, it agreed to buy 80 of HSBC Holdings Plc’s U.S. branches, picking up about $9 billion in deposits and $2.2 billion in loans.
“The acquisition of Investors, following on the heels of the acquisition of HSBC’s East Coast branches, further strengthens our formidable franchise in the Northeast, together adding roughly 1 million customers and boosting our near- and long-term growth potential,” Citizens Chief Executive Officer Bruce Van Saun said in the statement.
U.S. regional banks have turned to mergers and acquisitions to contend with fallout from historically low interest rates and the pressing need for more technology spending. Combinations, largely on hold during the depths of the Covid-19 pandemic, were just getting under way again when the Biden administration announced a directive aimed at taming a sharp increase in consolidation across industries.
At least $50 billion of deals have been announced by U.S. banks this year alone, more than the $45 billion in all of 2020. That includes New York Community Bancorp Inc.’s planned purchase of Flagstar Bancorp Inc. for $2.54 billion, and M&T Bank Corp.’s agreement to acquire People’s United Financial Inc. for roughly $7.6 billion.
With the HSBC and Investors deals, Citizens said it will be among the top 10 banks in New York City by deposits. The Investors acquisition will give Citizens 154 new branches, about 130 of which are in the New York City metropolitan area.
Under the terms of the agreement, stockholders of Short Hills, New Jersey-based Investors will receive 0.297 of a share of Citizens common stock and $1.46 in cash for each share of Investors they own. That will give them a stake of about 14% of the combined company, according to the statement.
Shares of Investors rose 4.6% to $13.62 at 7:20 a.m. in early New York trading, while Citizens fell 1.5% to $43.64. Both companies’ shares had gained more than 23% this year through Tuesday.
Investors CEO Kevin Cummings is expected to join Citizens’ board.
(Updates with CEO’s comment, background on regional bank mergers starting in fourth paragraph.)
More stories like this are available on bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.
