M&T Bank Corp. To Acquire Wilmington Trust

M&T Bank (NYSE MTB) announced that it will acquire Wilmington Trust WL in a stock-for-stock transaction that values WL at just $351 million. The transaction is expected to close mid-2011. The combination will add roughly 9% to MTB's 2012 EPS and increase its mid-Atlantic density. It also boosts MTB's scale in wealth management/ trust and increases its fee revenue contribution. However, its capital ratios remain below peers and the issue of TARP repayment remains a headwind to the shares. Morgan Stanley estimates the deal will add 9% to MTB's 2012 EPS and 10% to 2013 EPS, based on WL's current operating earnings, consistent with management's guidance of high-single-digit GAAP EPS accretion. However, Morgan Stanley's 2011 EPS declines by $0.62 to $4.90, given $159 mn of expected merger costs. MTB is trading lower at $77.21