The People’s United sale
How a December phone call led to a $7.6 billion deal
As People’s United Financial’s board reviewed the final details last week on the bank’s $7.6 billion sale, a social media staffer posted a reminder of Random Acts of Kindness Day that included a suggestion that people reach out to friends they have not spoken to for a while.
As it turns out, People’s United CEO Jack Barnes had fielded just such a call only several weeks before — not quite random, but an outreach that culminated in the mammoth merger with M&T Bank.
Both Barnes and M&T
Bank CEO Rene Jones described ties between the companies dating back years, including prior, casual discussions of benefits of a combination.
But it was only in December, when Jones called Barnes with the suggestion they take a serious look at a merger, that it came to be — with no other companies invited to put in an offer for People’s United, despite the Bridgeport bank getting assistance from investment bankers and attorneys who have familiarity with other companies shopping for acquisitions.
“At least a few years ago, we started talking about the possibility of bringing the companies together and ... the pros and cons of what that might look like,” Barnes said Monday. “Last December, I was asked to have a more serious conversation and I agreed to do that . ... It was a [sole] negotiated deal.”
There is plenty of precedent for that scenario, including the concurrent merger under way between Huntington and TCF based in Ohio and Michigan respectively, with the new
Huntington to trail by a small margin M&T’s $200 billion in assets after the People’s United merger. In Securities & Exchange Commission filings this month, Huntington and TCF described a similar set of conversations between their CEOs that resulted in a merger agreement in the span of six weeks.
But more often than not, other potential acquirers enter the mix at some point in the process — including in the case of Farmington Bank, which was bought in 2018 by People’s United after on-again, off-again discussions over the years.
The People’s United deal
came about only after Farmington Bank CEO John Patrick’s negotiated in 2017 to combine his company with another bank. The two sides were enthusiastic about the prospect before doing a deeper dive that
revealed “differences in their respective operating models and business plans” as described in an SEC filing, and agreeing to go their separate ways. Barnes and Patrick rekindled talks
in April 2018, announcing the acquisition agreement in mid-June that year.
And in the case of UnitedBank, the Hartford-based company weighed simultaneous interest from People’s United and another bank in 2018, with the latter deal imploding. UnitedBank circled back around to People’s
United, which was slow to return to the table as it worked through the Farmington Bank deal, but ultimately did reopen talks, culminating in a 2019 acquisition.
In a web conference with M&T employees on Monday, Jones confirmed he initiated the December call that led to People’s United acquisition. M&T is paying a 13-percent premium for shares of People’s United, pushing the stock to $19.50 Wednesday
afternoon, slightly short of previous peaks for the stock on an adjusted basis in 2018 and in 2008, on the doorstep of the Great Recession.
“Probably over a year and a half ago, Jack and I started talking about the challenges of banking, the large institutions that were out there, and whether our models were still relevant, and how we could make them really relevant,” Jones said Monday. “We had been talking about that for some time, and then in December I gave Jack a ring.
“I just really believe that, as I looked at the landscape, we would be better with you and you would be better with us,” Jones continued, recollecting how he broached the topic of a merger with Barnes. “And so we said, ‘OK, well, maybe that’s true — let’s take a look.’”