S&P Places Wilmington Trust on "Positive" Watch Ahead of M&T Bank Acquisition

Wilmington Trust, a troubled Delaware-based lender, has been placed on "positive" watch by Standard & Poor's (S&P) following the announcement of its acquisition by M&T Bank in a stock deal worth USD351 million. The review is expected to conclude by the middle of next year, pending approval from regulators and Wilmington's shareholders. This move is seen as a strategic step by Wilmington to alleviate its construction loan losses, which have significantly weakened its common equity. M&T Bank is expected to benefit from Wilmington's strong presence in the Delaware market and its corporate trust and wealth management advisory business lines.

Key Takeaways:

• S&P has placed Wilmington Trust's ratings on "positive" watch ahead of the company's acquisition by M&T Bank in a USD351 million stock deal.
• The review is expected to conclude by the middle of next year, pending approval from regulators and Wilmington's shareholders.
• Wilmington Trust's efforts to curb construction loan losses are expected to benefit from the acquisition, which has already been cleared by both companies' boards.
• M&T Bank is expected to benefit from Wilmington's leading presence in the Delaware market and strong corporate trust and wealth management advisory business lines.
• The finalized merger is expected to bring Wilmington's ratings up to the A-/A-2 level of M&T Bank.
• In the unlikely event of a deal collapse, Wilmington's ratings could drop several notches into speculative territory.

Statistics:

• The acquisition deal is worth USD351 million (EUR252m).
• The review is expected to conclude by the middle of next year.
• Wilmington Trust's common equity has been significantly weakened due to construction loan losses.
• M&T Bank's A-/A-2 level rating is expected to be achieved following the finalized merger.

Sources:

• "S&P puts Wilmington on "positive" watch on M&T Bank deal" (C)2010 M2 COMMUNICATIONS.
• http://www.m2.com (published November 2, 2010).