Sterling Bancorp and Hudson Valley Holding Corp. aannounced today they have entered into a definitive merger agreement in a stock-for-stock transaction valued at approximately $539 million, based on the closing price of Sterling Bancorp common stock on November 4, 2014. The merger will create a leading regional bank specializing in serving small-to-middle market commercial and consumer clients in the greater New York metropolitan area.
The merger agreement calls for a fixed exchange ratio of 1.92 shares of Sterling Bancorp common stock for each share of Hudson Valley Holding Corp. common stock. The merger consideration represents an 18.4% premium to Hudson Valley Holding's share price as of the close of business on November 4, 2014. Upon closing, Sterling Bancorp stockholders will own approximately 69% of the stock of the combined company and Hudson Valley Holding Corp. stockholders will own approximately 31%.
Upon completion of the merger, the new company will have approximately $10.5 billion in assets, $6.6 billion in gross loans, and deposits of more than $8.1 billion. The merger is expected to generate approximately $34 million in fully phased-in annual cost savings and is expected to be accretive to Sterling Bancorp's earnings per share in the calendar years ending December 31, 2015 and 2016.
"The unique strengths of Hudson Valley Holding Corp. and Sterling Bancorp are a perfect strategic fit, and will strengthen our position as a high performance regional bank. In particular, Sterling's commercial lending expertise will be complemented by Hudson Valley's attractive deposit base. The resulting institution will have strong asset generation capabilities, a cost effective funding mix, and a broad footprint in the dynamic marketplace centered on New York City and its surrounding region. We are excited by the opportunity to build on these strengths to serve our combined customer base, deliver value to stockholders, and support the economies of our local communities. Execution is the key in such transactions, and our recent experience in uniting Sterling Bancorp and Provident New York Bancorp will provide a blueprint for success," said Jack L. Kopnisky, President and CEO of Sterling Bancorp.
Stephen R. Brown, President and CEO of Hudson Valley, commented, "We look forward to joining the Sterling Bancorp franchise. Sterling Bancorp's product offerings and resources will benefit our customers, communities and stockholders. This is an exceptional opportunity to combine two banks which share consistent core values and a relationship-based approach to customers."
The combined company will continue to operate under the Sterling Bancorp name and its principal banking subsidiary will continue under the name Sterling National Bank. The resulting institution will have a footprint spanning New York City, the Hudson Valley, Long Island and New Jersey.
The leadership team of the combined company will be assembled from both organizations with Sterling Bancorp's Jack Kopnisky serving as Chief Executive Officer and Luis Massiani serving as Chief Financial Officer. Effective at the closing of the transaction, Sterling will appoint four directors from the Board of Directors of Hudson Valley to join the Board of Directors of the combined company.
The transaction has been approved by the Boards of Directors of both companies, and is expected to close in the second quarter of 2015. The transaction is subject to approval by each company's stockholders, as well as regulatory approval and other customary closing conditions.
Jefferies LLC is serving as lead financial advisor to Sterling Bancorp and rendered a fairness opinion to the Board of Directors of Sterling in connection with the transaction. RBC Capital Markets, LLC also rendered a fairness opinion to Sterling's Board of Directors. Wachtell, Lipton, Rosen & Katz is acting as Sterling's legal counsel. Keefe, Bruyette & Woods, Inc. is serving as financial advisor to Hudson Valley Holding Corp. and rendered a fairness opinion to the Board of Directors of Hudson Valley in connection with the transaction. Day Pitney LLP is acting as Hudson Valley's legal counsel.