Webster Financial in Waterbury, Conn., has agreed to buy Sterling Bancorp in Pearl River, N.Y.
The $33 billion-asset Webster said in a press release Monday that it will pay $5.1 billion in stock for the $29.8 billion-asset Sterling, based on Sterling’s shares outstanding and each company’s closing price on April 16.
The deal, which is expected to close in the fourth quarter, priced Sterling at 192% of its tangible book value.
Webster shareholders will own 50.4% of the company, which will have more than 200 branches, $63 billion of assets, $42 billion of loans and $52 billion of deposits.
The company will keep the Webster name and establish a new corporate headquarters in Stamford, Conn. It will continue to maintain offices in Waterbury and the greater New York City area.
John Ciulla, Webster’s chairman, president and CEO, will remain president and CEO. Jack Kopnisky, Sterling’s president and CEO, will serve as executive chairman for two years, at which point he will be succeeded by Ciulla.
The board will include eight directors from Webster and seven from Sterling.
“We are excited to combine the best of both companies to create an industry leader," Kopnisky said in the release. "The increased capabilities and scale of our two organizations are attractive propositions for our clients, communities, shareholders and colleagues."
"We are bringing together two high-performing organizations with strong cultural and business model alignment to create a powerhouse Northeast bank," Ciulla added. "This combination provides exceptional financial benefits and enables us to more aggressively invest in key businesses and activities to enhance value for our customers, our communities, our shareholders and our bankers."
The deal is expected to be 20% accretive to Webster’s earnings per share, including $120 million of projected cost savings. The company is also expected to generate $440 million of excess capital every year. It should take less than a year for Webster to earn back any dilution to its tangible book value.
Webster plans to cut about 11% of the combined company’s annual noninterest expenses. The company expects to incur $245 million of merger-related expenses.
J.P. Morgan Securities and Wachtell, Lipton, Rosen & Katz advised Webster, and Piper Sandler rendered a fairness opinion to Webster's board. Citigroup Global Markets and Squire Patten Boggs advised Sterling, while Keefe, Bruyette & Woods provided a fairness opinion to Sterling's board.
