Allied Irish Banks to sell its stake in M&T Bank, offers shares valued at $2.07 billion

Allied Irish to sell M&T Bank stake valued at $2B

DUBLIN — Debt-laden Allied Irish Banks PLC announced Thursday it plans to sell its stake in M&T Bank Corp. of New York in a public share offering valued at $2.07 billion (€1.48 billion).

Allied Irish, based in Dublin, is trying to sell its foreign assets and drum up enough capital to stave off nationalization.

Central Bank of Ireland regulators are requiring Allied Irish to raise €10.4 billion by the end of the year. Analysts agree this goal will require more billions from the government, which is already Allied’s biggest shareholder with a 17 percent stake. They forecast that the government stake will ultimate rise above 90 percent as Allied Irish issues new shares, chiefly to the government because of the lack of investor interest.

Allied Irish tchsaid it was offering for sale its 22.4 percent stake in M&T through an issuing of 26.7 million new notes costing $77.50 (€55.35) each — a discount on M&T’s closing share price Tuesday of $83.

M&T has nearly 750 branches, over 1,800 ATMs and over 13,500 employees across New York, Maryland, Pennsylvania, Washington D.C., Virginia, West Virginia and Delaware.

The M&T holding is one of the remaining profitable interests of Allied Irish, which has been hammered at home by its aggressive lending to property developers. Ireland’s long-runaway property market plummeted in 2008 and has yet to reach bottom.

Investors took the M&T sale price and terms as disappointing news for Allied Irish. Its shares fell 7 percent to €0.41 on a day when other financial shares were rising on the Irish Stock Exchange.

Allied Irish had spent several months hoping to negotiate a sale of the M&T stake to another European or American bank at a higher price. The leading candidate had been Spain’s Banc Santander, which last month did buy Allied’s Polish banking interests for around €3.1 billion.

But Santander in the summer abandoned its negotiations with Buffalo, New York-based M&T about a potential merger with Santander-owned Sovereign Bank of Boston, greatly reducing its interest in acquiring Allied Irish’s stake.

Allied Irish said it would convene an extraordinary shareholders meeting Nov. 1 in Dublin to vote to approve the M&T stock selloff.

Morgan Stanley and Citigroup are underwriting the transaction and have agreed to buy any M&T shares that go unsold.

Allied Irish remains on course to offer €5.4 billion in new shares next month, an issue likely to be acquired chiefly by the government. Allied Irish has a market capitalization of below €600 million. It is still seeking a buyer for its British banking division, which includes the First Trust Bank in Northern Ireland.

Online:

Allied Irish announcement, bit.ly/c4Oxj2