M&T Bank Corp. (MTB: Quote) said Friday it would need more time to close its $3.7 billion proposed acquisition of Hudson City Bancorp Inc. (HCBK: Quote) due to anti-money laundering and other concerns raised by the Federal Reserve.
Following the news, shares of M&T lost 4 percent in afternoon trade and Hudson City stock slid 5 percent.
M&T said the Federal Reserve has raised certain regulatory concerns with the bank's procedures, systems and processes relating to M&T Bank Secrecy Act and anti-money-laundering compliance program.
M&T, which filed its applications with regulators in September 2012, said it has commenced a major initiative to address the regulatory concerns.
M&T said that owing to the potential time needed to satisfy the regulatory concerns and other potential requirements, the closure of the deal will be delayed.
M&T and Hudson City plan to extend the date after which either party may terminate the deal if it has not yet been completed from August 27, 2013 to January 31, 2014. The companies said there is no assurance that the deal will be completed by that date.
The two companies said that other terms of the deal remain unchanged, and that they will proceed with their shareholders meetings later this month to consider the deal.
In August, Buffalo, New-York M&T agreed to acquire Hudson City in a cash and stock deal valued at about $3.7 billion. If the deal consummates, M&T will acquire New Jersey-based Hudson City's network of 135 branch offices, and the combined company will operate a network of 870 branches that will stretch from Connecticut to Virginia.
M&T expects to gain about $25 billion in deposits and $28 billion in loans from the merger, and upon the merger, M&T expects to repay about $13 billion of Hudson City's long-term borrowings.
MTB is trading at $100.68, down 4.04%, on a volume of 1.5 million shares on the New York Stock Exchange.
Hudson City is trading at $8.31, down 5.27%, on a volume of 12.3 million shares on the Nasdaq.
by RTT Staff Writer
For comments and feedback: email@example.com