KeyCorp will acquire First Niagara in a cash and stock transaction valued at approximately $4.1 billion, making the parent of KeyBank the 13th largest bank in the U.S.
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KeyCorp (NYSE:KEY) and First Niagara banks are not the only banks which are looking to merge. 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.
“I wouldn’t be surprised to see this shake up the banking industry in upstate New York”, said Edward W. Hutton, a Niagara University professor and a former Buffalo banker. Once the sale is finalized, the company will have $99.8 billion in deposits, $83.6 billion in loans and 1,366 branches across 15 states.
“Key and First Niagara are a powerful combination”, said Beth E. Mooney, Key’s CEO.
Even though Key Bank has been part of the Buffalo community since 1980, Schumer says he remains concerned that the acquisition could mean layoffs for the local workforce and negatively impact regional economy. It also will make Key a more formidable competitor to the region’s unquestioned banking leader, M&T, which controls almost 51 percent of the region’s deposits. Currently, the analyst consensus on KeyCorp is Moderate Buy and the average price target is $14, representing a 12.7% upside. Under the terms of the agreement, Constant Contact shareholders will only receive $32.00 in cash for each share owned, which is virtually no premium over the 52-week high and significantly lower than at least one analyst’s estimated value of $50.00 per share.
First Niagara shares edged up 4 cents to $10.42 in morning trading Friday while KeyCorp dropped 85 cents, or 6.3 percent, to $12.53.
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First Niagara employs 2,230 people in Western New York with KeyCorp employing 1,100.
