CLEVELAND, Oct. 30, 2015 /PRNewswire/ -- KeyCorp (NYSE: KEY)
and First Niagara Financial Group (NASDAQ: FNFG) announced
today that they have entered into a definitive agreement under
which KeyCorp will acquire First Niagara in a cash and stock
transaction for total consideration valued at approximately
$4.1 billion.
First Niagara, headquartered 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 approximately
$135 billion of assets, the combined
bank will be the 13th largest commercial bank
headquartered in the U.S.
The combination will create a leading regional bank with
enhanced scale to serve three 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 will also expand its
operations to attractive markets throughout Pennsylvania, Massachusetts and Connecticut.
Under the terms of the agreement, which was unanimously approved
by the Boards of Directors of each company, the merger
consideration will be approximately $4.1
billion. 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 per share based
on the closing price of KeyCorp common stock on October 29, 2015. 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.
"Key and First Niagara are a powerful combination, driven by a
shared commitment to the clients and to the communities we serve,"
said KeyCorp Chairman and CEO Beth
Mooney. "This transformational opportunity will bring
compelling and complementary capabilities to our shared 3 million
clients, while driving meaningful synergies and enhancing
shareholder value. KeyBank and First Niagara both have
values-based cultures and a long-term commitment to and experience
with the region"
"I am confident that the combination of First Niagara and Key
will benefit our shareholders, customers and the communities we
serve and will build off the great progress that the First Niagara
team has made," said Nathaniel D.
Woodson, Chairman of the Board of Directors of First
Niagara. "We believe that this partnership provides significant
value for our shareholders and allows them to participate in the
upside potential of the combined Key and First Niagara."
"I am incredibly proud of all that my team has accomplished to
put our customers at the center of all we do," said Gary M. Crosby, President and CEO of First Niagara. "Combining
our strengths with those of Key will enable us to even better serve
customers with a broader set of product features and functionality,
while providing our team members with expanded opportunities as
part of a larger, more-diversified organization. Key shares our
values and our culture of diversity, inclusion and community
service – I look forward to working with their team to ensure a
seamless integration of our businesses for the benefit of all of
our stakeholders."
"We have known First Niagara for a long time and have
always been impressed by the quality of their people and their
commitment to the community. We look forward to welcoming First
Niagara clients and employees to Key," said Mooney.
Importantly, the compelling financial rationale for the
transaction provides significant upside potential for shareholders
of both companies. The acquisition diversifies KeyCorp's loan
portfolio, strengthens its core retail deposit franchise and
provides expanded scale. Upon completion of the transaction,
the combined company will have approximately $99.8 billion in deposits, $83.6 billion in loans and 1,366 branches across
15 states. The combined company will have approximately
$135 billion of pro forma assets
providing increased operating leverage to deliver improved
financial performance.
Shareholders of both companies will benefit from annual cost
savings in excess of $400 million
from maximizing efficiencies of technology infrastructure,
procurement savings across the combined organization, and
optimizing overlapping branches. The combined bank will be better
positioned to generate attractive financial returns for
shareholders through improved efficiency, strong returns on capital
and earnings accretion. Finally KeyCorp will maintain
its strong capital position, enabling the company to continue to
return capital to
shareholders.
KeyCorp expects the acquisition to be accretive to earnings per
share in 2017, excluding one-time charges, and expects the
transaction to deliver an attractive Internal Rate of Return of
approximately 15%.
KeyCorp and First Niagara have built a legacy of philanthropy
and civic involvement and will continue this commitment to the
markets the combined company will serve. Together, the
combined companies have nearly $5
billion in lending and investments supporting underserved
individuals and communities. Additionally, Key will make a
$20 million contribution to the First
Niagara Foundation to continue its important community
initiatives.
Upon closing the transaction, KeyCorp expects to successfully
integrate First Niagara into its business. KeyCorp and First
Niagara have the shared expertise, the culture and the capital to
ensure a successful transition. Christopher M. Gorman, President of Key Corporate Bank, will lead the
merger integration team which will be comprised of both KeyCorp and
First Niagara team members. "Chris is a dynamic,
client-centric leader who is credited with successfully leading,
integrating, transforming, and growing businesses throughout his
30-year career in financial services," said Mooney.
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.
Advisors
Morgan Stanley & Co. LLC served as lead
financial advisor and KeyBanc Capital Markets as financial advisor
to KeyCorp. Simpson Thacher & Bartlett LLP served as
legal counsel to KeyCorp.
J.P. Morgan Securities LLC served as financial advisor to First
Niagara, and Sullivan & Cromwell served as legal counsel to
First Niagara.
Conference Call
A conference call will be held at
8:00 a.m. ET on Friday, October 30, 2015. The live audio webcast
of the conference call and presentation materials will be available
at www.key.com/ir. If you are unable to join the live
conference call, or wish to hear a re-broadcast, access
www.key.com/ir and select Presentations & Webcasts.
About Key
KeyCorp was organized more than 160 years
ago and is headquartered in Cleveland,
Ohio. One of the nation's largest bank-based financial
services companies, Key had assets of approximately $95.4 billion at September
30, 2015. Key provides deposit, lending, cash
management and investment services to individuals and small and
mid-sized businesses in 12 states under the name KeyBank National
Association. Key also provides a broad range of sophisticated
corporate and investment banking products, such as merger and
acquisition advice, public and private debt and equity,
syndications and derivatives to middle market companies in selected
industries throughout the United
States under the KeyBanc Capital Markets trade name. For
more information, visit https://www.key.com/. KeyBank is Member
FDIC.
About First Niagara
First Niagara, through its wholly owned subsidiary,
First Niagara Bank, N.A., is a multi-state community-oriented bank
with approximately 390 branches, $39
billion in assets, $29 billion
in deposits, and approximately 5,400 employees providing financial
services to individuals, families and businesses across
New York, Pennsylvania, Connecticut and Massachusetts. For more information, visit
www.firstniagara.com.
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, KeyCorp will file
with the SEC a Registration Statement on Form S-4 that will include
the Joint Proxy Statement of KeyCorp and First Niagara and a
Prospectus of KeyCorp, as well as other relevant documents
concerning the proposed transaction. This communication does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval. INVESTORS
AND SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND
THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT
BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the Joint Proxy Statement/Prospectus, as well
as other filings containing information about KeyCorp and First
Niagara, may be obtained at the SEC's Internet site
(http://www.sec.gov). You will also be able to obtain these
documents, free of charge, from KeyCorp at investor.key.com or from
First Niagara by accessing First Niagara's website at
www.firstniagara.com. Copies of the Joint Proxy
Statement/Prospectus can also be obtained, free of charge, by
directing a request to KeyCorp Investor Relations at Investor
Relations, KeyCorp, 127 Public Square, Mailcode OH-01-27-0737,
Cleveland, Ohio 44114-1306, by
calling (216) 689-3000, or by sending an e-mail to
investor_relations@keybank.com or to First Niagara Investor
Relations at 726 Exchange Street, Suite 618, Buffalo, New York 14210, by calling (716)
819-5669 or by sending an e-mail to investor@fnfg.com. In
addition, KeyCorp and First Niagara use their respective Investor
Relations websites and social media outlets as channels of
distribution of material company information. Such
information is accessible on KeyCorp's and First Niagara's Investor
Relations websites, as well as on their respective Facebook pages
and through their Twitter accounts and LinkedIn accounts.
KeyCorp and First Niagara and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the respective shareholders of
KeyCorp and First Niagara in respect of the transaction described
in the Joint Proxy Statement/Prospectus. Information regarding
KeyCorp's directors and executive officers is contained in
KeyCorp's Proxy Statement on Schedule 14A, dated April 7, 2015, which are filed with the
SEC. Information regarding First Niagara's directors and
executive officers is contained in First Niagara's Proxy Statement
on Schedule 14A, dated March 23,
2015, which are filed with the SEC. Additional information
regarding the interests of those participants and other persons who
may be deemed participants in the transaction may be obtained by
reading the Joint Proxy Statement/Prospectus regarding the proposed
merger when it becomes available. Free copies of this document may
be obtained as described in the preceding paragraph.
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
including, but not limited to, KeyCorp's and First Niagara's
expectations or predictions of future financial or business
performance or conditions. Forward-looking statements are typically
identified by words such as "believe," "expect," "anticipate,"
"intend," "target," "estimate," "continue," "positions," "plan,"
"predict," "project," "forecast," "guidance," "goal," "objective,"
"prospects," "possible" or "potential," by future conditional verbs
such as "assume," "will," "would," "should," "could" or "may", or
by variations of such words or by similar expressions. These
forward-looking statements are subject to numerous assumptions,
risks and uncertainties, which change over time. Forward-looking
statements speak only as of the date they are made and we assume no
duty to update forward-looking statements. Actual results may
differ materially from current projections.
In addition to factors previously disclosed in KeyCorp's and
First Niagara's reports filed with the SEC and those identified
elsewhere in this communication, the following factors, among
others, could cause actual results to differ materially from
forward-looking statements or historical performance: ability to
obtain regulatory approvals and meet other closing conditions to
the merger, including approval by KeyCorp and First Niagara
shareholders on the expected terms and schedule, including the risk
that regulatory approvals required for the merger are not obtained
or are obtained subject to conditions that are not anticipated;
delay in closing the merger; difficulties and delays in integrating
the First Niagara business or fully realizing cost savings and
other benefits; business disruption following the merger; changes
in asset quality and credit risk; the inability to sustain revenue
and earnings growth; changes in interest rates and capital markets;
inflation; customer acceptance of KeyCorp's products and services;
customer borrowing, repayment, investment and deposit practices;
customer disintermediation; the introduction, withdrawal, success
and timing of business initiatives; competitive conditions; the
inability to realize cost savings or revenues or to implement
integration plans and other consequences associated with mergers,
acquisitions and divestitures; economic conditions; and the impact,
extent and timing of technological changes, capital management
activities, and other actions of the Federal Reserve Board and
legislative and regulatory actions and reforms.
Annualized, pro forma, projected and estimated numbers are
used for illustrative purpose only, are not forecasts and may not
reflect actual results.
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SOURCE KeyCorp