Mergers and Acquisitions

Mergers and Acquisitions
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Mergers and Acquisitions: A Case of M&T Bank and Wilmington Trust Corporation
Mergers and Acquisitions are increasingly being adapted in the business world of today to enhance competitiveness via increase performances of business organizations. The process results in economic and financial benefits for involved companies in aspects like increased market share and expansion of investment portfolios that enable risk reduction (Homburg & Bucerius, 2005). In addition, mergers and acquisitions facilitate entry into new markets and economies of scale among other benefits (Sharma, 2009).
The major reason for merger from an abstract point of view lays in the financial thought that one company plus another company results in a gain of three companies. As well, mergers and acquisitions facilitate increase shareholder value over and above combined value of the two firms involved prior to the progression. Firms intending to acquire other companies employ the use of ‘growth potential hypotheses' via the target company by conducting detailed research undertakings (Dutta and Kumar, 2009)
M&T Bank acquired the Wilmington Trust Corporation in 2011. The Bank Corporation headquartered in Buffalo, New York is a commercial bank operating in the United States under license from both the state and federal governments; it is registered with the ‘Board of Governors of the Federal Reserve Board System' (Federal Reserve Board) under the Bank Holding Company Act (BHCA) of 1956. The ‘M&T Bank Corporation' is the current legal name maintained even after its merger with Wilmington Trust Corporation back in 2011, a case this paper focuses on. The financial institution traces its origin from Manufacturers and Traders Bank of New York. After subsequent mergers and acquisitions, the company adopted the legal name of M&T Bank with listing of its stock in the New York Stock Exchange (NYSE) under the symbol ‘MTB' (SEC, 2014). On November 1, 2010, M&T bank Corporation and Wilmington Trust Corporation (formed in 1903) announced jointly their intent and agreement to merge, an arrangement that would join operations of the two firms under a single management structure in 2011.
Circumstances that resulted in the Merger
M&T Bank was characterized by a strong and sound financial position as one of the 20 largest Banks in the United States of America while Wilmington Trust Corporation was under financial distress prior to the merger. Wilmington Corporation had reported a third-quarterly loss of around $365 Million. The Chairman of Wilmington Trust corporation stated that the institution "continue to face difficult financial realities associated with the credit quality of the loan portfolio," he added that after careful evaluation the Board and financial advisers of Wilmington Trust believed the merger with M&T was a viable option to safeguard the interest of shareholders, customers and staff. As such, the shareholders of Wilmington Trust Corporation accepted a stock-to-stock exchange deal in which they received a 0.051372 share of M&T's Bank common stock for each share of Wilmington. Even so, M&T was interested in Wealth management and corporate clients banking portfolio of Wilmington Corporation, key capabilities common to both companies considering the $10.4 asset base held by Wilmington Corporation at the time. Speaking in regard of the merger, M&T Chairman Mr. Robert G. Wilmer believed the deal "brings together two institutions that share many common values, and that operate several distinct but complementary lines of business." In addition, Wilmington capabilities as the leading retail commercial bank in the Delaware area were another point of interest for M&T Bank (M&T 2014).
The effects of the merger
The new entity, M&T Bank achieved a strong Balance sheet with over $83 Billion in fixed assets and deposits as at 31 December 2012, placing the firm at the top 20 level in the country. The company has also gained an overall extensive customer base with over 700 branches in the US domestic market. This represents a realization of the power of synergy by the organization through mergers and acquisitions. In other words, the market position of the company has undergone tremendous transformation that has enabled it to gain the desired financial soundness to achieve considerable growth and development in the highly dynamic ...