First Niagara to Acquire NewAlliance in $1.5B Deal

First Niagara Financial Group in Buffalo announced a deal Thursday to acquire NewAlliance Bancshares Inc. for $1.5 billion.

The combined bank would have more than $29 billion in assets — including more than $14 billion in loans and $18 billion in deposits — positioning First Niagara as one of the nation's 25 biggest banks, according to a press release.

Shareholders of the $8.7 billion-asset New Alliance, based in New Haven, Conn., would receive 1.1 shares of First Niagara common stock in the deal. Given Wednesday's closing price, this represents $14.09 per New Alliance share, a 24% premium.

First Niagara said NewAlliance's extensive branch network will serve as a foundation for the Buffalo-based bank's growth in New England.

"In Connecticut and Massachusetts, we will be able to continue our record of increasing lending to consumers and businesses while making a positive impact in the communities we serve," First Niagara CEO John Koelmel said in the press release. "NewAlliance and its outstanding leadership and employee team will be critical to the success of our long-term growth and expansion plans in New England. Additionally, we will be able to do even more for the community as a larger, stronger institution."

NewAlliance, with $4.9 billion in loans and $5.1 billion in deposits, has 88 branches, serving eight counties from Greenwich, Conn., to Springfield, Mass. All 88 branches are expected to be converted and rebranded as First Niagara locations. New Alliance's headquarters in New Haven is slated to become First Niagara's New England regional market center.

"We are very proud that NewAlliance's exceptional balance sheet, credit quality and overall franchise strength enabled us to put a deal together that allows our shareholders to participate in a tremendous long-term growth opportunity, while also providing them immediate value," NewAlliance chief executive Peyton Patterson said in a press release.

Patterson said the new deal would create a "super-regional powerhouse."

The boards of directors of both companies have unanimously approved the deal, which is expected to close in the second quarter of 2011, subject to regulatory approval.

This is the fourth major acquisition First Niagara has made in the past three years, boosting its assets from $8 billion in June 2007 to $20.5 billion in June 2010. It acquired Greater Buffalo Savings Bank in 2008; 57 branches in western Pennsylvania from the former National City Corp. in 2009; and Harleysville National Corp. Harleysville, Pa., in April 2010.

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