08/27/2012 05:10 EDT | Updated 10/27/2012 05:12 EDT

M&T Bank purchasing Hudson City Bancorp in cash-and-stock deal valued at about $3.7 billion

NEW YORK, N.Y. - M&T Bank Corp. is buying Hudson City Bancorp Inc. in a cash-and-stock deal valued at about $3.7 billion that will broaden its reach in the eastern U.S. Hudson City's stock climbed nearly 16 per cent Monday.

The buyout includes Hudson City's 135 branch offices located in New York, New Jersey and Connecticut.

The combined company will include 870 branches located in states running from Connecticut to Virginia. M&T says there is very little overlap between its existing branches and those of Hudson City.

Both companies' boards have approved the transaction, but it needs approval from both companies' shareholders. The deal is expected to add to earnings per share.

M&T, based in Buffalo, N.Y., has $80.8 billion in assets. Hudson City, based in Paramus, N.J., has $43.6 billion in assets.

Each Hudson City share will receive consideration valued at 0.08403 of an M&T share in the form of either M&T stock or cash.

Hudson City's stock rose $1.01, or 15.7 per cent, to close at $7.45 Monday. Shares of M&T rose $3.95, or 4.6 per cent, to $89.82.

M&T said it expects to receive about $25 billion in deposits and $28 billion in loans from the buyout, prior to acquisition-related accounting adjustments. M&T says this will give it the fourth biggest deposit share in New Jersey.

M&T said that after the deal closes it plans to pay back about $13 billion of Hudson City's long-term borrowings by liquidating its investment portfolio.