By Lisa Kerner
Charlotte, N.C., July 27 - KeyCorp signed a definitive agreement to acquire U.S.B. Holding Co., Inc. for an estimated $575 million.
Under the agreement, each share of U.S.B. Holding common stock will be exchanged for 0.455 of a share of KeyCorp common stock and $8.925 in cash. Options not exercised by the closing date will convert to KeyCorp options.
Both companies' boards of directors have approved the transaction, which is slated to close within the next six months subject to shareholder and regulatory approvals.
KeyCorp is the Cleveland-based holding company for KeyBank NA. U.S.B. Holding is the holding company for Union State Bank based in Orangeburg, N.Y.
With the acquisition, KeyBank will add 31 branches to its 32 branches in the Hudson Valley and become one of the largest financial institutions in the area. Union State Bank clients will gain access to KeyBank's 1,500 ATMs and its online banking sites.
"We believe our specialties in small business, middle market banking, private banking and wealth management will be an excellent fit in these markets," KeyCorp vice chair and head of Key Community Banking Beth Mooney said in a company news release.
"While we explored many alternatives, including remaining independent, we feel that our combination with Key is best for our clients and employees," U.S.B. Holding chairman and chief executive officer Thomas E. Hales added.
KeyCorp expects the transaction to be accretive to its earnings in 2009 with an expected internal rate of return of 14%. The company also expects to incur an after-tax charge of approximately $26 million in connection with the transaction's closing.
KeyCorp was advised by Sullivan & Cromwell LLP. U.S.B. Holding was advised by Keefe, Bruyette & Woods, Inc. and Thacher Proffitt & Wood LLP, Washington, D.C.
| Acquirer: | KeyCorp
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| Target: | U.S.B. Holding Co., Inc.
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| Transaction total: | $575 million
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| Price per share: | 0.455 of a KeyCorp share and $8.925 in cash
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| Announcement date: | July 27
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| Expected closing: | Within six months
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| Stock price for acquirer: | NYSE: KEY: $35.21 on July 26
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| Stock price for target: | NYSE: UBH: $15.29 on July 26
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