Hope you all took my observations to heart. I expected the stock to run to at least $8 plus the dividends before the buyout. I'm out now because of my own financial considerations, but it could go even higher.
Subject to the terms and conditions of the Merger Agreement, upon completion of the Merger, Hudson City shareholders will have the right to receive, at their election (but subject to customary procedures applicable to oversubscription and undersubscription for cash consideration), cash or shares of common stock, par value $0.50 per share, of M&T (the "M&T Common Stock"), in either case having a value equal to the product of 0.08403 multiplied by the average closing price of the M&T Common Stock for the ten trading days immediately prior to the completion of the Merger (the "Merger Consideration"). At the closing of the Merger, approximately 40% of the outstanding shares of Hudson City common stock will be converted into right to receive cash in an amount equal to the Merger Consideration and the remainder of the outstanding shares of Hudson City common stock will be converted into the right to receive shares of M&T Common Stock having a value equal to the Merger Consideration.
There's no premium. The real buyout price is not the price as announced several days ago. The buyout price will be determined by the price of MTB stock at the time of closing (I believe it is to be a 5 day average of MTB stock price just prior to the closing date?) completed sometime in the 2nd quarter of 2013. MTB wants a 60% stock exchange plus 40% cash deal at closing. HCBK stock will fluctuate with the price of MTB until then. I think that it could push $8 by closing because I think that MTB stock price will advance to maybe $95 by then. MTB's target was $95 prior to the announcement; it does not take into consideration the benefits to MTB's revenue and earnings that HCBK will contribute. MTB's stock is running around $90.50 today, .08403 X $90.50 = $7.604715, no premium.
Here's what someone at Motley Fool's stated which I would have to agree with:
M&T's first order of business in the Hudson City purchase is cleaning up its $13 billion in long-term debt by liquidating its similarly sized investment portfolio. The deal is to be financed 60% in stock, and 40% in cash. This will cause a $2.2 billion dilution of M&T shares. The good news, for M&T at least, is that the purchase price is less than 80% of Hudson City's tangible book value. And regardless whether Hudson City was experiencing profitability problems, no one ever questioned its capitalization. At the end of the second quarter, its total risk based capital was nearly 21% of assets. That rich capitalization will inure to M&T's benefit.
I have liked M&T for a long time, as it was one of the banks least impacted by the recent recession, and never even came close to losing money in any year in the last fifteen. Hudson City was on pace to earn about $280 million in profits this year, and therefore, even with the $2.2 billion dilution, the deal should be immediately accretive to M&T. M&T stock jumped about 7%, or 4 points, the day the deal was announced. I am looking for earnings for this year to advance only about five percent from 2011, but aided by the Hudson City deal, to advance much more sharply in 2013. I do not believe analysts have valued future earnings of M&T favorably, and I look for earnings of over $8 per diluted share next year. Combined with its dividend yield of over 3% and I believe M&T is a top tier selection among bank investors seeking stability and income.