October saw the three largest pending bank merger and acquisition deals of the year, including one that took three years to even receive approval from the Fed. Wells Fargo acquired $30 billion in loans from GE as it continued to dismantle its GE Capital division. Starwood Capital and Blackstone each paid around $5 billion to acquire new kinds of properties. And there were plenty more multibillion-dollar deals beyond those.
It was an exciting month to say the least. Here’s a rundown of some of October 2015’s largest bank and financial firm M&A deals.
Some of 2015’s Largest Bank Acquisition Deals
This month the $97 billion M&T Bank was finally approved to buy $36 billion Hudson City Bancorp in 2015 for $3.7 billion cash ($5.4 billion total). The deal, which took more than three years to get Fed approval, would expand M&T’s branch network in New York City and New Jersey and is the second-largest pending bank acquisition so far this year. As I mentioned in a previous post, the Fed actually had to make a rare exception to allow banks of their size to merge.
In the year’s largest deal to date, Cleveland-based KeyCorp agreed to buy First Niagara Financial and its First Niagara Bank branches in New York. The $4.1 billion merger deal, expected to close in the third quarter of 2016, would add nearly $39 billion in assets and 400 new branches to KeyCorp’s network in New York State (a 40% boost to its total branch size), and lead to annual cost savings of $400 million beginning in 2017. KeyCorp also estimated that the deal would lead to an internal rate of return of around 15%.
KeyCorp and First Niagara have a history. In 2012 KeyCorp acquired nearly 40 branches in the Buffalo and Rochester, New York, areas from First Niagara, which began divesting branches to satisfy antitrust concerns related to its then-recent acquisition of nearly 200 branches in upstate New York from HSBC USA.
New York Community Bancorp agreed to purchase Astoria Financial Corporation, which holds Astoria Bank — one of New York’s largest thrifts. The $2 billion deal is the third-largest pending bank acquisition this year (behind the M&T and Hudson Bancorp deal) and would boost the size of New York Community Bancorp’s branch network — as well as its deposit assets — by about 33% after adding around 85 new branches and nearly $10 billion in deposit business.
Raleigh-based Yadkin Bank, one of last year’s fastest-growing banks (and North Carolina’s largest community bank), continued its aggressive acquisition streak after it agreed to buy Greensboro-based NewBridge Bank for $456 million. The deal would more than double Yadkin’s assets and boost the size of its branch network by over 40% to around 110 branches in North Carolina.
Wells Fargo Agrees to Buy $30 Billion in Loans from GE Capital
General Electric originally announced in April 2015 that it would sell off some $200 billion in GE Capital financing assets to focus on its industrial business. In October, as part of this plan, GE agreed to sell GE Capital’s specialty financing business, along with some $30 billion in loans, to Wells Fargo; the deal is expected to close in early 2016.
$5 Billion-plus Property Acquisition Deals from Blackstone and Starwood Capital Group
Tapping more into the fast-growing healthcare sector, private-equity giant Blackstone Group agreed to acquire San Diego-based BioMed Realty Trust for a staggering $4.8 billion ($8 billion with debt). The purchase would include BioMed’s more than 18 million sq. ft. of rentable office and research space for biotechnology and pharmaceutical companies, including government agencies, scientific research institutions, and other life science-related groups.
In the largest nonhotel acquisition in its history, Starwood Capital Group announced it would buy an institutional-quality portfolio of 23,262 mid-rise and garden-style apartment buildings in 72 communities in South Florida, Denver, Colorado, Washington (DC), Seattle, and Inland Empire (California) from Equity Residential. The $5.4 billion purchase would essentially make Starwood one of the largest owners of multifamily housing in the US.
Asset Managers Boost AuM and Expand Service Lines
Boston-based middle-market financier NewStar Financial added to its specialty financing offerings after agreeing to purchase private alternative-asset manager Feingold O’Keeffe Capital for $19.3 million (net of acquired cash). The deal nearly added $2.3 billion in new assets under management, boosting NewStar’s total AUM by nearly 50% to $6.4 billion.
Private-equity firm TA Associates said it would acquire Russell Investments from the London Stock Exchange Group (LSEG) for $1.15 billion. After LSEG purchased Russell Investments in late 2014, it moved to sell the investment management arm of the firm to focus more on the indexing business (including its then-newly acquired Russell 2000 index). Indeed, by October 2015 LSEG sold the asset management side of Russell to private-equity firm TA Associates for $1.15 billion, while keeping the indexing side of Russell.
Intercontinental Exchange (which owns the New York Stock Exchange) agreed to buy Interactive Data Corp. from private-equity firms Silver Lake and Warburg Pincus for $5.2 billion according to AP. The deal would boost Intercontinental’s data and analytics offerings, which have been gaining in popularity in the index industry.
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Christian Hudspeth is a company analyst for Dun & Bradstreet who researches and reports on more than 1,000 banks and financial firms for Hoover’s company database subscribers. Before joining Dun & Bradstreet, Christian was a managing editor, senior financial writer and analyst for a financial publishing company. His financial articles have been featured on MSN Money, Business Insider, Nasdaq.com, and several other well-known online publications. Before he was an editor, Christian worked in the commercial banking industry for seven years.