M&T Bank to acquire Provident Bankshares in a stock-for-stock transaction

M&T Bank has entered into a definitive agreement to acquire Provident Bankshares in a stock-for-stock transaction valued at approximately
$401 million.


M&T will acquire 143 Provident branch offices and 198 ATMs located primarily in Maryland and Virginia, adding to its current total of 177 branches and 545 ATMs in the same region.


Under the terms of the merger agreement, Provident common shareholders will receive 0.17 shares of M&T common stock in exchange for each share of Provident common stock they own.


In the merger, shares of Provident preferred stock will be exchanged for shares of preferred stock of M&T, and holders of Provident stock options will receive M&T stock options, in each case on the terms and subject to the conditions set forth in the merger agreement.


The merger has been approved by the boards of directors of each company, is subject to certain customary conditions, including regulatory approval and approval by Provident’s common shareholders, and is expected to close late in the second quarter of 2009.


After the transaction is completed, Gary Geisel, chairman and CEO of Provident, will be appointed to the board of directors of M&T and its principal banking subsidiary, M&T Bank. M&T also will establish a Baltimore-Washington area directors advisory council with participation from Provident’s board.


Keefe, Bruyette and Woods acted as financial adviser to M&T, and Wachtell Lipton Rosen & Katz acted as its legal adviser in the transaction. Sandler O’Neill + Partners acted as financial adviser to Provident and Sullivan & Cromwell and Kilpatrick Stockton LLP acted as its legal advisers.


Mr Geisel, chairman and CEO of Provident,  said: This is an opportunity for our constituents and shareholders to participate in the growth of one of the nation’s most successful banking franchises. This merger also provides the resources that Provident’s customers, employees and communities will require during this challenging economic environment. While Provident has performed well in this difficult environment, in the quarters ahead, we would face significant challenges, particularly in our investment portfolio.