Shares of M&T Bank (its Philadelphia arm is the old Frankford Trust) jumped more than $3 to above $94 today (highest since 2008) on speculation it's close to a profitable merger deal.
"We think M&T would want to buy Santander's wholly-owned U.S. subsidiary, Sovereign Bank," Macquarie Securities analyst Al Savastano tells clients in a report. "The purchase price of $7.9 billion would include a mix of stock and cash." The deal would "transform" M&T and "give the company a much wider presence in the Northeast" up to Boston, where Sovereign is now based (used to be Reading.)
Combined, the banks would have the biggest branch network in Pennsylvania, with nearly 500 offices, vs nearly 400 for market-leader PNC (though the merged banks would likely close or sell some offices.) "M&T for Sovereign... makes sense," wrote KBW Inc.'s Matthew Clark.
But company stocks usually fall, instead of rising, when they're about to buy something big. This is the reverse of speculation last month that Banco Santander of Spain, which owns (formerly Reading-based) Sovereign Bank, wants to buy Buffalo-based M&T as Allied Irish Banks tries to sell its 20% M&T stake.
Bloomberg said last week that Santander has confirmed there've been talks but nothing decisive. "No comment," said M&T spokesman Mike Zabel. Same, said Sovereign spokeswoman Ellen Molle.