KeyCorp announced Friday it will purchase First Niagara Financial Group for $4.1 billion, creating the 13th largest commercial bank in the United States, at a time when financial firms are contending with low interest rates and increasing regulatory costs.
News of the buyout had an immediate effect, causing shares of First Niagara to go up 3 percent in pre-market trading, according to Reuters.
Cleveland-based KeyCorp offered $11.40 per share for each First Niagara share, representing a premium of about 10 percent to the stock's close on Thursday.
Buffalo, N.Y.-based First Niagara Financial Group Inc., has nearly 400 locations in New York, Pennsylvania, Connecticut and Massachusetts. It has $29 billion in deposits and $39 billion in assets.
The combined company will have about $99.8 billion deposits, $83.6 billion in loans and 1,366 branches across 15 states, according to the Associated Press.
KeyCorp said it expects the deal to add to its earnings in 2017.
This is one of the biggest bank mergers of the year and reinforces 2015 as the biggest year for bank deals since the financial crisis, according to The Wall Street Journal.
The deal is expected to close by the third quarter of 2016.
