Citizens to Buy Investors Bancorp in $3.5 Billion NYC Push
(Bloomberg) -- Citizens Financial Group Inc. agreed to buy Investors Bancorp Inc. in a $3.5 billion deal that will give it a bigger presence in New York City and Philadelphia.
The cash and stock transaction will give Citizens roughly $27 billion of assets, bringing its total above $200 billion, and is expected to be completed in the first half of next year, the banks said in a statement Wednesday.
Citizens, based in Providence, Rhode Island, is already among the 20 biggest U.S. banks and has been growing through acquisitions. Earlier this year, it agreed to buy 80 of HSBC Holdings Plc’s U.S. branches, picking up about $9 billion in deposits and $2.2 billion in loans.
“The acquisition of Investors, following on the heels of the acquisition of HSBC’s East Coast branches, further strengthens our formidable franchise in the Northeast, together adding roughly 1 million customers and boosting our near- and long-term growth potential,” Citizens Chief Executive Officer Bruce Van Saun said in the statement.
U.S. regional banks have turned to mergers and acquisitions to contend with fallout from historically low interest rates and the pressing need for more technology spending. Combinations, largely on hold during the depths of the Covid-19 pandemic, were just getting under way again when the Biden administration announced a directive aimed at taming a sharp increase in consolidation across industries.
At least $50 billion of deals have been announced by U.S. banks this year alone, more than the $45 billion in all of 2020. That includes New York Community Bancorp Inc.’s planned purchase of Flagstar Bancorp Inc. for $2.54 billion, and M&T Bank Corp.’s agreement to acquire People’s United Financial Inc. for roughly $7.6 billion.
With the HSBC and Investors deals, Citizens said it will be among the top 10 banks in New York City by deposits. The Investors acquisition will give it 154 new branches, about 130 of which are in the New York City metropolitan area.
Van Saun has said in recent weeks that Citizens was open to deals. In an interview Wednesday, he said the bank will shift its focus to making bolt-on acquisitions to expand other businesses.
“This was the big one-two punch in banking where we wanted to get into this region, and we’ve been able to accomplish that,” he said. “And then we’ll continue to look for opportunities to grow our capabilities in some of our fee-based activities, like the capital-markets space as well as the wealth space.”
Under the terms of the agreement, stockholders of Short Hills, New Jersey-based Investors will receive 0.297 of a share of Citizens common stock and $1.46 in cash for each share of Investors they own. That will give them a stake of about 14% of the combined company, according to the statement.
Shares of Investors rose 8.7% to $14.15 at 9:48 a.m. in New York, while Citizens fell 3.5% to $42.79. Both companies had gained more than 23% this year through Tuesday.
Investors CEO Kevin Cummings is expected to join Citizens’ board.
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