e424b3
Filed Pursuant to
Rule 424(b)(3)
Registration No. 333-170740
Dear Holders of Wilmington Trust
common stock:
You are cordially invited to attend a special meeting of the
common stockholders of Wilmington Trust Corporation
(Wilmington Trust) to be held on March 22, 2011 at 10:00
a.m. (Eastern) at Wilmington Trust Plaza, Mezzanine Level, 301
West Eleventh Street, Wilmington, Delaware.
At the special meeting, you will be asked to consider the merger
of Wilmington Trust and M&T Bank Corporation (M&T) and
adopt the Agreement and Plan of Merger (merger agreement), dated
October 31, 2010, that Wilmington Trust has entered into
with M&T and MTB One, Inc., a wholly owned direct
subsidiary of M&T (Merger Sub). You also will be asked to
approve the adjournment, postponement, or continuation of the
special meeting, if necessary, to solicit additional proxies in
favor of the adoption of the merger agreement.
Under the terms of the merger agreement, Merger Sub will merge
with and into Wilmington Trust, and Wilmington Trust will become
a wholly owned subsidiary of M&T. If the merger is
completed, Wilmington Trust common stockholders will have a
right to receive 0.051372 of a share of M&T common stock
for each share of Wilmington Trust common stock held as of
immediately prior to the merger.
Under the terms of the merger agreement, the exchange ratio does
not change, but the market value of the merger consideration
will fluctuate with the market price of M&T common stock.
The table below shows how these fluctuations changed the
transaction valuation between October 29, 2010, and
February 9, 2011, the last practicable trading day before
we distributed this proxy statement/prospectus.
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Implied Value of
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M&T
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Wilmington Trust
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One Share of
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Common Stock
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Common Stock
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Wilmington Trust
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(NYSE: MTB)
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(NYSE: WL)
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Common Stock
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At October 29, 2010
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$
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74.75
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$
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7.11
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$
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3.84
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At February 9, 2011
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$
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88.77
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$
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4.47
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$
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4.56
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After careful consideration, our Board of Directors has declared
unanimously that the merger agreement and the transactions
contemplated thereby are advisable. Our Board of Directors
recommends that you vote FOR the adoption of the
merger agreement, and FOR the approval of the
adjournment, postponement, or continuation of the special
meeting, if necessary, to solicit additional proxies in favor of
the adoption of the merger agreement.
For more information about the merger agreement and the
circumstances that led to it, please read the attached proxy
statement/prospectus in its entirety. We encourage you to read
it carefully and to pay particular attention to the Risk Factors
section that begins on page 16. This proxy
statement/prospectus also constitutes M&Ts prospectus
for the common stock it will issue in connection with the
merger. You may obtain additional information about Wilmington
Trust and M&T from documents both companies have filed with
the Securities and Exchange Commission.
Your vote is very important. We cannot complete the
merger without the affirmative vote of a majority of our
outstanding common stock. If you fail to vote, if you fail to
authorize your broker to vote on your behalf, or if you abstain
from voting, the effect will be the same as if you had voted
against the adoption of the merger agreement.
Whether or not you plan to attend the special meeting, please
vote as soon as possible to ensure that your shares are
represented. Instructions on how to vote appear on the enclosed
proxy card. If you sign and return your proxy card without
specifying your vote, your shares will be voted in favor of the
adoption of the merger agreement and the adjournment,
postponement, or continuation of the special meeting, if
necessary, to solicit additional proxies in favor of the
adoption of the merger agreement.
If you have any questions or need assistance voting your shares,
please contact Morrow & Co., LLC, a firm that is
helping us solicit proxies, toll-free at
(800) 662-5200.
Thank you in advance for your consideration of this matter.
Sincerely,
Donald E. Foley
Chief Executive
Officer
Neither the Securities and Exchange Commission nor any state
securities commission or bank regulatory agency has approved or
disapproved the securities to be issued in the merger or
determined if this proxy statement/prospectus is accurate or
adequate. Any representation to the contrary is a criminal
offense.
The securities to be issued in the merger are not savings or
deposit accounts or other obligations of any bank or non-bank
subsidiary of either M&T or Wilmington Trust, and they are
not insured by the Federal Deposit Insurance Corporation or any
other governmental agency.
This proxy statement/prospectus is dated February 9, 2011
and is first being distributed to Wilmington Trust common
stockholders on or about February 14, 2011.
WILMINGTON
TRUST CORPORATION
NOTICE OF SPECIAL MEETING OF COMMON STOCKHOLDERS
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Date and time |
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March 22, 2011 at 10:00 a.m. (Eastern) |
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Location |
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Wilmington Trust Plaza, Mezzanine Level,
301 West Eleventh Street, Wilmington, Delaware |
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Items of business |
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The purpose of the special meeting is for the common
stockholders of Wilmington Trust to consider and vote on the
following matters: |
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A proposal to adopt the Agreement and Plan of Merger
(merger agreement) dated October 31, 2010, by and among
M&T, Merger Sub, and Wilmington Trust, under which Merger
Sub will merge with and into Wilmington Trust.
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A proposal to adjourn, postpone, or continue the
special meeting, if necessary, to solicit additional proxies in
favor of adopting the merger agreement.
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Record date |
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We have fixed the close of business on February 9, 2011, as
the record date for determining those common stockholders
entitled to notice of and to vote at the special meeting. Only
Wilmington Trust common stockholders of record at the close of
business on that date are entitled to vote at the special
meeting and any adjournments, postponements, or continuations of
the special meeting. |
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The holder of Wilmington Trusts preferred stock may attend
the special meeting, but is not entitled to and is not being
asked to vote at the special meeting. |
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At the close of business on February 9, 2011, there were
outstanding and entitled to vote approximately
91,423,333 shares of our common stock. |
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Voting |
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Please vote as soon as possible. We cannot complete the
merger without the affirmative vote of a majority of the shares
of our outstanding common stock. If you fail to vote, if you
fail to authorize your broker to vote on your behalf, or if you
abstain from voting, the effect will be the same as if you had
voted against approval of the adoption of the merger agreement. |
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Instructions on how to vote are on the enclosed proxy card. |
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Whether or not you plan to attend the special meeting, it is
important that you vote as soon as possible to ensure your
shares are represented at the special meeting. |
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Registered stockholders |
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If you hold Wilmington Trust common stock in your name, you may
vote: |
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Online by accessing the Internet Web site printed on
your proxy card.
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Via telephone by calling the toll-free number
printed on your proxy card.
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By signing and returning your proxy card in the
enclosed postage-paid envelope.
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If you attend the special meeting, you may vote in person even
if you previously returned your proxy card. |
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Beneficial stockholders |
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If you hold Wilmington Trust common stock in the name of a
broker, bank, or other fiduciary, please follow the instructions
on the voting card provided by that broker, bank, or other
fiduciary. |
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If you wish to attend the special meeting and vote in person,
you must bring with you a proxy or letter from the broker, bank,
other fiduciary, or other nominee to confirm your beneficial
ownership of the shares. |
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Questions |
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If you have any questions or need assistance voting your shares,
please contact Morrow & Co., LLC, a firm that is
helping us solicit proxies, toll-free at
(800) 662-5200. |
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Additional information |
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The merger agreement is attached as Annex A of the attached
proxy statement/prospectus. We encourage you to read the entire
proxy statement/prospectus carefully, especially the Risk
Factors section that begins on Page 16. |
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After careful consideration, our Board of Directors has declared
unanimously that the merger agreement and the transactions
contemplated thereby are advisable. Our Board of Directors
recommends that you vote FOR the adoption of the
merger agreement, and FOR the approval of the
adjournment, postponement, or continuation of the special
meeting, if necessary, to solicit additional proxies in favor of
the adoption of the merger agreement. |
By Order of the Board of Directors
Michael A. DiGregorio
Secretary
Wilmington, Delaware
February 9, 2011
ADDITIONAL
INFORMATION
This proxy statement/prospectus incorporates by reference
important business and financial information about M&T and
Wilmington Trust from other documents that are not included in
or delivered with this proxy statement/prospectus. This
information is available to you without charge upon your written
or oral request. You can obtain those documents incorporated by
reference into this proxy statement/prospectus by accessing the
Securities and Exchange Commissions website maintained at
http://www.sec.gov
or by requesting copies in writing or by telephone from the
appropriate company:
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M&T Bank Corporation
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Wilmington Trust Corporation
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Attention: Shareholder Relations
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Attention: Investor Relations
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One M&T Plaza
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Rodney Square North
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Buffalo, New York 14203
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1100 North Market Street
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(716)
842-5138
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Wilmington, Delaware 19890-0001
(302) 651-8069
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You will not be charged for any of these documents that you
request. If you would like to request documents from either
company, please do so by March 15, 2011 in order to receive
them before Wilmington Trusts special meeting.
M&Ts Internet address is
http://www.mtb.com
and Wilmington Trusts Internet address is
http://www.wilmingtontrust.com.
The information on our Internet sites is not a part of this
proxy statement/prospectus.
See Where You Can Find More Information on
Page 82 and Recent Developments on Page 7.
ABOUT
THIS DOCUMENT
This document, which forms part of a registration statement on
Form S-4
filed with the Securities and Exchange Commission, which we
refer to as the SEC, by M&T (File
No. 333-170740),
constitutes a prospectus of M&T under Section 5 of the
Securities Act of 1933, as amended, which we refer to as the
Securities Act, with respect to the M&T common shares to be
issued to Wilmington Trust common stockholders as required by
the merger agreement. This document also constitutes a proxy
statement under Section 14(a) of the Securities Exchange
Act of 1934, as amended, which we refer to as the Exchange Act.
It also constitutes a notice of meeting with respect to the
special meeting of Wilmington Trust common stockholders, at
which Wilmington Trust common stockholders will be asked to vote
upon a proposal to adopt the merger agreement.
You should rely only on the information contained or
incorporated by reference into this document. No one has been
authorized to provide you with information that is different
from that contained in, or incorporated by reference into, this
document. This document is dated February 9, 2011. You
should not assume that the information contained in, or
incorporated by reference into, this document is accurate as of
any date other than that date. Neither the mailing of this
document to Wilmington Trust stockholders nor the issuance by
M&T of stock in connection with the merger will create any
implication to the contrary.
This document does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities, or the
solicitation of a proxy, in any jurisdiction to or from any
person to whom it is unlawful to make any such offer or
solicitation in such jurisdiction. Except where the context
otherwise indicates, information contained in this document
regarding Wilmington Trust has been provided by Wilmington Trust
and information contained in this document regarding M&T
has been provided by M&T.
TABLE OF
CONTENTS
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Page
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iv
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1
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7
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13
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ii
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Annex A: Agreement and Plan of Merger, dated as of
October 31, 2010, by and among M&T, Merger Sub and
Wilmington Trust
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A-1
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Annex B: Opinion of Lazard Frères & Co. LLC
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B-1
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Annex C: Opinion of Morgan Stanley & Co.
Incorporated
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C-1
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PART II INFORMATION NOT REQUIRED IN PROSPECTUS
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II-1
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iii
QUESTIONS
AND ANSWERS ABOUT THE MERGER AND SPECIAL MEETING
The questions and answers below highlight only selected
procedural information from this proxy statement/prospectus.
They do not contain all of the information that may be important
to you. You should read carefully the entire document and the
additional documents incorporated by reference into this proxy
statement/prospectus to fully understand the merger agreement
and the transactions contemplated thereby, including the merger,
and the voting procedures for the special meeting. We generally
refer to M&T Bank Corporation as M&T,
Wilmington Trust Corporation as Wilmington
Trust, and MTB One, Inc., a wholly owned subsidiary of
M&T, as Merger Sub throughout this proxy
statement/prospectus.
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Q: |
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What is the proposed transaction for which I am being asked
to vote? |
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A: |
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Wilmington Trusts common stockholders are being asked to
adopt the Agreement and Plan of Merger, dated as of
October 31, 2010 by and among M&T, Merger Sub and
Wilmington Trust, pursuant to which Merger Sub will be merged
with and into Wilmington Trust, with Wilmington Trust surviving,
which we refer to as the merger within this proxy
statement/prospectus. In addition, you may also be asked to vote
to approve a proposal to adjourn, postpone or continue the
special meeting, if necessary, to solicit additional proxies in
favor of the adoption of the merger agreement. |
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Who is entitled to vote? |
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A: |
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Only holders of record of Wilmington Trust common stock at the
close of business on February 9, 2011 will be entitled to
vote at the special meeting. The holder of Wilmington
Trusts preferred stock is not entitled to and is not being
requested to vote at the Wilmington Trust special meeting. |
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When and where will the special meeting be held? |
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The special meeting will be held at Wilmington Trust Plaza,
Mezzanine Level, 301 West Eleventh Street, Wilmington, Delaware,
on March 22, 2011 at 10:00 a.m., local time. |
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What do I need to do now? |
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After you have carefully read this proxy statement/prospectus
and have decided how you wish to vote your shares, please vote
your shares promptly. If you hold common stock in your name as a
stockholder of record, you must complete, sign, date and mail
your proxy card in the enclosed postage paid return envelope as
soon as possible. You may also authorize a proxy to vote your
shares by telephone or through the Internet as instructed on the
enclosed proxy card. If you hold your stock in street
name through a bank or broker, you must direct your bank
or broker to vote in accordance with the instructions you have
received from your bank or broker. Submitting your proxy card,
authorizing a proxy by telephone or through the Internet, or
directing your bank or broker to vote your shares will ensure
that your shares are represented and voted at the special
meeting. |
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Q: |
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If I am a Wilmington Trust common stockholder, should I send
my Wilmington Trust stock certificates with my proxy card? |
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A: |
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No. Please DO NOT send your Wilmington Trust stock
certificates with your proxy card. After the merger is
completed, M&T will send you instructions for exchanging
Wilmington Trust stock certificates for the merger
consideration. Unless Wilmington Trust common stockholders
specifically ask to receive M&T stock certificates, the
shares of M&T stock they receive in the merger will be
issued in book-entry form. |
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Why is my vote important? |
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If you do not vote by proxy or vote in person at the special
meeting, it will be more difficult for us to obtain the
necessary quorum to hold our special meeting. In addition, your
failure to vote, by proxy or in person, will have the same
effect as a vote against the adoption of the merger agreement.
The merger agreement must be adopted by the affirmative vote of
the holders of a majority of the outstanding shares of
Wilmington Trust common stock entitled to vote on the matter.
Approval of the proposal to adjourn, postpone or continue the
special meeting, if necessary for the purpose of soliciting
additional proxies, requires the affirmative vote of the holders
of a majority of the outstanding shares of Wilmington Trust
common stock entitled to vote on the |
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matter. The holder of Wilmington Trusts preferred stock is
not entitled to and is not being requested to vote at the
Wilmington Trust special meeting. Wilmington Trusts
Board of Directors unanimously recommends that you vote FOR
adoption of the merger agreement and FOR the approval of the
adjournment, postponement or continuation of the special
meeting, if necessary, to solicit additional proxies in favor of
adoption of the merger agreement. |
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If my shares of common stock are held in street name by my
broker, will my broker automatically vote my shares for me? |
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No. Your broker cannot vote your shares without
instructions from you. You should instruct your broker as to how
to vote your shares, following the directions your broker
provides to you. Please check the voting form used by your
broker. |
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What if I fail to instruct my broker? |
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If you do not provide your broker with instructions and your
broker submits an unvoted proxy, referred to as a broker
non-vote, the broker non-vote will be counted toward a quorum at
the special meeting, but it will have the same effect as a vote
against adoption of the merger agreement. With respect to the
proposal to adjourn the special meeting if necessary to solicit
additional proxies, an abstention or failure to instruct your
broker will have the same effect as a vote against the proposal. |
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Can I attend the special meeting and vote my shares in
person? |
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Yes. All common stockholders, including common stockholders of
record and common stockholders who hold their shares through
banks, brokers, nominees or any other holder of record, may
attend the special meeting. Holders of record of Wilmington
Trust common stock can vote in person at the special meeting.
The holder of Wilmington Trusts preferred stock may attend
the special meeting, but is not entitled to and is not being
requested to vote at the special meeting. If you are not a
common stockholder of record, you must obtain a proxy, executed
in your favor, from the record holder of your shares of common
stock, such as a broker, bank or other nominee, to be able to
vote in person at the special meeting. If you plan to attend the
special meeting, you must hold your shares of common stock in
your own name or have a letter from the record holder of your
shares of common stock confirming your ownership and you must
bring a form of personal photo identification with you in order
to be admitted. |
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Can I change my vote? |
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Yes. A Wilmington Trust common stockholder who is a stockholder
of record and has given a proxy may revoke it at any time before
its exercise at the special meeting by (i) giving written
notice of revocation to Wilmington Trusts corporate
secretary, (ii) properly submitting to Wilmington Trust a
duly executed proxy bearing a later date or (iii) attending
the special meeting and voting in person. Any common stockholder
entitled to vote in person at the special meeting may vote in
person regardless of whether a proxy has been previously given,
and such vote will revoke any previous proxy, but the mere
presence (without notifying the Corporate Secretary) of a common
stockholder at the special meeting will not constitute
revocation of a previously given proxy. If you hold your shares
in street name through a bank or broker, you should
contact your bank or broker to revoke your proxy. |
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Any written notices of revocation and other communications with
respect to revocation of proxies should be addressed to
Wilmington Trust as follows: Corporate Secretary, Rodney Square
North, 1100 North Market Street, Wilmington, DE
19890-0001,
which must be received by 11:59 p.m. Eastern time
on March 21, 2011, or the day before the meeting date,
if the special meeting is adjourned, postponed or continued. |
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Proxies may also be revoked via the Internet or telephone
following the instructions on your proxy card. |
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Q: |
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Will Wilmington Trust be required to submit the merger
agreement to its stockholders? |
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A: |
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Yes. Under the terms of the merger agreement, unless the merger
agreement is terminated before the Wilmington Trust special
meeting, Wilmington Trust is required to submit the merger
agreement to its common stockholders even if Wilmington
Trusts Board of Directors has withdrawn, modified or
qualified its recommendation. |
v
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Q: |
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When do you expect to complete the merger? |
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A: |
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We expect to complete the merger by mid-year 2011, subject to
the receipt of regulatory approvals and other customary closing
conditions. However, we cannot assure you when or if the merger
will occur. Among other things, we cannot complete the merger
until we obtain the approval of Wilmington Trust common
stockholders at the special meeting. |
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Q: |
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Whom should I call with questions about the special meeting
or the merger? |
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A: |
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Wilmington Trust common stockholders should call
Morrow & Co., LLC, Wilmington Trusts proxy
solicitor, toll-free at
(800) 662-5200,
with any questions about the special meeting or the merger and
related transactions. |
vi
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus. It may not contain all the information
that is important to you. We urge you to read carefully this
entire document and the other documents we refer you to for a
more complete understanding of the merger between M&T and
Wilmington Trust. In addition, we incorporate by reference into
this proxy statement/prospectus important business and financial
information about M&T and Wilmington Trust. You may obtain
the information incorporated by reference into this proxy
statement/prospectus without charge by following the
instructions in the section entitled Where You Can Find
More Information on Page 82. Each item in this
summary includes a page reference directing you to a more
complete description of that item. Unless otherwise indicated in
this proxy statement/prospectus or the context otherwise
requires, all references in the proxy statement/prospectus to
M&T, we, our or
us refer to M&T Bank Corporation. All
references to the Company or to Wilmington
Trust refer to Wilmington Trust Corporation.
We
Propose a Merger of Wilmington Trust and Merger Sub
(Page 53)
We propose that Merger Sub, a wholly owned direct subsidiary of
M&T, will merge with and into Wilmington Trust, with
Wilmington Trust as the surviving corporation. Upon completion
of the merger, Wilmington Trust will become a wholly owned
subsidiary of M&T, and Wilmington Trust common stock will
no longer be publicly traded. We currently expect to complete
the merger by mid-year 2011, subject to the receipt of
regulatory approvals and other customary closing conditions.
In the
Merger, Wilmington Trust Common Stockholders Will Have a
Right to Receive 0.051372 of a Share of M&T Common Stock
per Share of Wilmington Trust Common Stock
(Page 53)
Under the terms of the merger agreement, Wilmington Trust common
stockholders will have the right to receive 0.051372 of a share
of M&T common stock for each share of Wilmington Trust
common stock held immediately prior to the merger. M&T will
not issue any fractional shares of M&T common stock in the
merger. Wilmington Trust common stockholders who would otherwise
be entitled to a fractional share of M&T common stock will
instead receive a payment of cash in lieu of such fractional
share.
What
Holders of Wilmington Trust Stock Options and Stock Based
Awards Will Receive (Page 53)
Under the terms of the merger agreement, upon completion of the
merger, all outstanding and unexercised employee and director
options to purchase shares of Wilmington Trust common stock
(whether vested or unvested) will, by virtue of the merger, be
cancelled and cease to exist and no payment will be made on such
options.
Under the terms of the merger agreement, each share of
restricted stock that is outstanding immediately prior to the
merger and each other right of any kind to receive shares of
Wilmington Trust common stock (other than stock options) granted
under Wilmington Trusts stock plans will, subject to
applicable law and otherwise subject to the terms of the
applicable stock award or plan, fully vest and, upon completion
of the merger, be converted into the right to receive the merger
consideration. The foregoing applies to shares issued under
Wilmington Trusts 1996 Long-Term Incentive Plan, 1999
Long-Term Incentive Plan, 1999 Executive Incentive Plan, Amended
and Restated 2002 Long-Term Incentive Plan, 2001 Non-Employee
Directors Stock Option Plan, 2004 Executive Incentive
Plan, Amended and Restated 2005 Long-Term Incentive Plan,
Amended and Restated Directors Deferred Fee Plan, 2009
Executive Incentive Plan, and 2009 Long-Term Incentive Plan.
The
Merger Is Intended to Be Taxable to Wilmington Trust Common
Stockholders as to the Shares of M&T Common Stock They
Receive (Page 67)
The merger generally will be a taxable transaction to you, and
you will generally recognize gain or loss in an amount equal to
the difference, if any, between (i) the sum of the value of
the M&T common stock plus the amount of any cash received
in lieu of fractional shares of M&T common stock and
(ii) your adjusted tax basis in the shares of Wilmington
Trust common stock exchanged in the merger.
1
The
United States federal income tax consequences described above
may not apply to all holders of Wilmington Trust common stock.
Your tax consequences will depend on your individual situation.
Accordingly, we strongly urge you to consult your tax advisor
for a full understanding of the particular tax consequences of
the merger to you.
Wilmington
Trusts Board of Directors Unanimously Recommends that
Wilmington Trust Stockholders Vote FOR Adoption
of the Merger Agreement (Page 34)
Wilmington Trusts Board of Directors has unanimously
declared advisable the merger agreement and the transactions
contemplated thereby, including the merger, and recommends that
Wilmington Trust common stockholders vote FOR the
adoption of the merger agreement, and FOR the
approval of the adjournment, postponement or continuation of the
special meeting, if necessary, to solicit additional proxies in
favor of the adoption of the merger agreement.
In concluding that the merger is advisable and recommending that
Wilmington Trusts stockholders adopt the merger agreement,
Wilmington Trusts Board of Directors considered numerous
factors, including, among others, the following:
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The credit deterioration in Wilmington Trusts loan
portfolio, particularly in real estate construction loans, which
deterioration resulted in a loan loss provision of
$77.4 million in the first quarter of 2010,
$205.2 million in the second quarter of 2010, and
$281.5 million in the third quarter of 2010.
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Managements belief that, without a strategic transaction
acceptable to its regulators, Wilmington Trust would likely face
significant regulatory actions in the near term, which would
likely result in a significant impairment of its business
prospects.
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The need to ensure that Wilmington Trusts two fee-based
businesses Wealth Advisory Services and Corporate
Client Services did not suffer significant
deterioration.
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The effects Wilmington Trust and its businesses likely would
suffer if Wilmington Trust did not enter into a strategic
transaction on or before the release of its third quarter
results and the public availability of its call reports,
including the likelihood of a material decline in the value of
its common stock, a reduction in its credit ratings, a
significant loss of clients, the potential termination of
business relationships that are tied to Wilmington Trusts
credit ratings and capital ratios, and significant regulatory
actions.
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M&Ts superior earnings and credit performance across
economic cycles, which would make it a strong and stable partner
for Wilmington Trust; the likelihood that the merger would
receive the necessary regulatory approvals in a timely fashion;
and the strength of M&Ts commercial and consumer
banking businesses in the Northeast region that uniquely
complement Wilmington Trusts regional banking in the
mid-Atlantic area and its global wealth management and corporate
client services businesses.
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For more information concerning the background of the merger,
the recommendation of Wilmington Trusts Board of Directors
and the reasons for the merger and the recommendation, please
see the discussions under The Merger
Background of the Merger and The Merger
Wilmington Trusts Reasons for the Merger; Recommendation
of Wilmington Trusts Board of Directors, commencing
on Page 24 and Page 34, respectively.
Opinions
of Wilmington Trusts Financial Advisors
(Page 37)
Each of Lazard Frères & Co. LLC, or Lazard, and
Morgan Stanley & Co. Incorporated, or Morgan Stanley,
rendered its oral opinion, subsequently confirmed in writing, to
Wilmington Trusts Board of Directors that, as of
October 31, 2010 and based upon and subject to the
assumptions, procedures, factors, qualifications and limitations
set forth in their respective written opinions, the exchange
ratio was fair from a financial point of view to the holders of
shares of Wilmington Trust common stock.
The full text of the written opinions of Lazard and Morgan
Stanley, both dated October 31, 2010, which set forth the
assumptions made, procedures followed, matters considered and
limitations on the review undertaken in connection with each
opinion, are included in this proxy statement/prospectus as
Annex B and Annex C, respectively. Lazard and Morgan
Stanley provided their respective opinions for the information
and assistance
2
of Wilmington Trusts Board of Directors for purposes of
its evaluation of the merger and addressed only the fairness as
of the date of the opinion, from a financial point of view, of
the exchange ratio to the holders of Wilmington Trust common
stock. Neither Lazards opinion nor Morgan Stanleys
opinion constitutes a recommendation to any holder of Wilmington
Trust common stock as to how any such holder should vote or act
with respect to the merger, any related matter or any other
matter. In addition, neither Lazard nor Morgan Stanley was
requested to opine as to, and neither opinion in any manner
addresses, Wilmington Trusts underlying business decision
to proceed with or effect the merger.
For further information, please see the discussion under the
caption The Merger Opinions of Wilmington
Trusts Financial Advisors, commencing on
Page 37.
Wilmington
Trusts Directors and Executive Officers May Have Interests
in the Merger that Differ from Your Interests
(Page 49)
In considering the information contained in this proxy
statement/prospectus, you should be aware that Wilmington
Trusts executive officers and directors may have financial
interests in the merger that are different from, or in addition
to, the interests of Wilmington Trust stockholders. These
additional interests of Wilmington Trusts executive
officers and directors may create potential conflicts of
interest and cause these persons to view the proposed
transaction differently than you may view it as a stockholder.
Wilmington Trusts Board of Directors was aware of these
interests and took them into account, among other matters, in
its decision to approve the merger agreement and the
transactions contemplated thereby, including the merger. For
information concerning these interests, please see the
discussion under the caption The Merger
Interests of Wilmington Trusts Directors and Executive
Officers in the Merger, commencing on Page 49.
For further information as to the special meeting and the proxy
solicited by Wilmington Trusts Board of Directors for
purposes of the special meeting, please see the discussion under
the caption Questions and Answers about the Merger and
Special Meeting and The Merger Interests
of Wilmington Trusts Directors and Executive Officers in
the Merger, commencing on Page iv and Page 49,
respectively.
Comparative
Market Prices of Securities (Page 69)
M&T common stock and Wilmington Trust common stock are
listed on the New York Stock Exchange, or NYSE, under the
symbols MTB and WL, respectively. The
following table presents the closing prices of M&T common
stock and Wilmington Trust common stock on October 29,
2010, the trading day used to calculate the exchange ratio of
0.051372, and on February 9, 2011, the last practicable
date before our printing of this proxy statement/prospectus. The
table also presents the implied value of the merger
consideration proposed for each share of Wilmington Trust common
stock on those dates, as determined by multiplying the closing
price of M&T common stock on those dates by the exchange
ratio of 0.051372 provided for in the merger agreement, and
assuming no adjustment.
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Implied
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M&T
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Wilmington Trust
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Value of One
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Common Stock
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Common Stock
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Share of Wilmington Trust
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(NYSE: MTB)
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(NYSE: WL)
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Common Stock
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October 29, 2010
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$
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74.75
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$
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7.11
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$
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3.84
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February 9, 2011
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$
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88.77
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$
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4.47
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$
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4.56
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For each share of your Wilmington Trust common stock, you will
receive 0.051372 of a share of M&T common stock. The market
prices of both M&T common stock and Wilmington Trust common
stock will fluctuate prior to the merger. You should obtain
current stock price quotations for M&T common stock and
Wilmington Trust common stock. You can get these quotations from
a newspaper, on the Internet or by calling your broker.
3
Dividends
(Page 49)
The payment, timing and amount of dividends by M&T or
Wilmington Trust on their common stock in the future, either
before or after the merger is completed, are subject to the
determination of the respective M&T and Wilmington
Trust Boards of Directors and depend on cash requirements,
the financial condition and earnings of M&T and Wilmington
Trust, legal and regulatory considerations and other factors.
The
Merger Will Be Accounted for as a Business
Combination (Page 66)
The merger will be treated as a business combination
using the acquisition method of accounting with M&T treated
as the acquirer under generally accepted accounting principles,
or GAAP.
Special
Meeting of Wilmington Trust Common Stockholders
(Page 22)
Wilmington Trust plans to hold its special meeting of common
stockholders on March 22, 2011, at 10:00 a.m. local time,
at Wilmington Trust Plaza, Mezzanine Level, 301 West Eleventh
Street, Wilmington, Delaware. At the special meeting you will be
asked to adopt the merger agreement, and to adjourn, postpone or
continue the special meeting, if necessary, to solicit
additional proxies in favor of the merger agreement.
You can vote at the Wilmington Trust special meeting of common
stockholders if you owned Wilmington Trust common stock at the
close of business on February 9, 2011. As of that date,
there were approximately 91,423,333 shares of Wilmington
Trust common stock outstanding and entitled to vote,
approximately 905,093 of which, or approximately 1%, were
owned beneficially or of record by directors and officers of
Wilmington Trust. You can cast one vote for each share of
Wilmington Trust common stock that you owned on that date.
Wilmington
Trust Stockholders Do Not Have Dissenters Appraisal
Rights in the Merger (Page 48)
Under applicable Delaware law, the holders of Wilmington Trust
common stock are not entitled to any dissenters rights of
appraisal in connection with the merger.
The
Merger Requires the Approval of Holders of a Majority of
Outstanding Shares (Page 22)
The merger agreement must be adopted by the holders of a
majority of the outstanding shares of Wilmington Trust common
stock entitled to vote on the matter. The holder of Wilmington
Trusts preferred stock is not entitled to and is not being
requested to vote at the Wilmington Trust special meeting.
Wilmington Trust is calling a special meeting of the common
stockholders to consider and vote on the proposal to adopt the
merger agreement. Wilmington Trusts Board of Directors has
fixed the close of business on February 9, 2011 as the
record date for determining the Wilmington Trust common
stockholders entitled to receive notice of and to vote at the
special meeting. As of that date, Wilmington Trust directors and
executive officers and their affiliates beneficially owned
approximately 905,093, or approximately 1%, of the shares
entitled to vote at the Wilmington Trust special meeting.
Conditions
That Must Be Satisfied or Waived for the Merger to Occur
(Page 64)
Currently, we expect to complete the merger by mid-year 2011. As
more fully described in this proxy statement/prospectus and in
the merger agreement, the completion of the merger depends on a
number of conditions being satisfied or, where legally
permissible, waived. These conditions include, among others:
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the adoption of the merger agreement by Wilmington Trust common
stockholders;
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the absence of any law, statute, code, ordinance, rule,
regulation or judgment issued, promulgated or entered into by
any governmental entity or order, injunction or decree by any
court or agency of competent jurisdiction, which is in effect
and prohibits completion of the merger;
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the receipt of all regulatory consents and approvals required
from the Board of Governors of the Federal Reserve System, which
we refer to as the Federal Reserve Board, the Office of the
State Bank Commissioner of the State of Delaware and the New
York State Banking Department to consummate the merger and the
expiration or termination of all related statutory waiting
periods;
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the approval for listing on the New York Stock Exchange of the
M&T common stock to be issued in the merger;
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the effectiveness of the registration statement of which this
proxy statement/prospectus is a part with respect to the
M&T common stock to be issued in the merger under the
Securities Act and the absence of any stop order or proceedings
initiated or threatened by the SEC for that purpose; and/or
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the truth and correctness of the representations and warranties
of each party in the merger agreement as of the closing date of
the merger, subject to the materiality standards provided in the
merger agreement, and the performance by each party in all
material respects of their obligations under the merger
agreement (and the receipt by each party of certificates from
the other party to such effect).
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Each of M&Ts and Merger Subs obligations to
complete the merger is also separately subject to the
satisfaction or waiver of the following condition:
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the absence of any action taken or law, rule, regulation or
judgment enacted, entered, enforced or deemed applicable to the
transactions contemplated by the merger agreement, in connection
with the grant of a required regulatory approval or otherwise,
that imposes any restriction or condition that, in
M&Ts good faith judgment, would reasonably be
expected to have a material adverse effect on M&T or on
Wilmington Trust, in each case measured on a scale relative to
Wilmington Trust.
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We cannot provide assurance as to when or if all of the
conditions to the merger can or will be satisfied or waived by
the appropriate party.
Termination
of the Merger Agreement (Page 65)
The merger agreement can be terminated at any time prior to
completion by mutual consent in a written instrument, if
authorized by each of M&Ts and Wilmington
Trusts Boards of Directors, or by either party in the
following circumstances:
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if the merger has not been completed by October 31, 2011,
unless the failure to complete the merger by that date is due to
the breach of the merger agreement by the party seeking to
terminate the merger agreement;
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if the Wilmington Trust common stockholders fail to adopt the
merger agreement at the special meeting;
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if any of the required regulatory approvals are denied or the
merger is legally prohibited (and the denial or prohibition is
final and nonappealable), so long as the party seeking to
terminate the merger agreement pursuant to this provision has
used its reasonable best efforts to contest, appeal or remove
such order, decree or ruling; or
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if the other party breaches the merger agreement in a way that
would cause the failure of a closing condition, unless the
breach is capable of being cured (and is cured) within 30
calendar days following receipt of written notice of such
breach, and unless the failure of any such condition to be
satisfied is the result of a material breach of the merger
agreement by the party seeking to terminate.
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In addition, M&T may terminate the merger agreement if:
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Wilmington Trusts Board of Directors (a) changes its
recommendation of the merger to Wilmington Trust stockholders,
or otherwise withdraws, modifies or qualifies (or publicly
proposes to withdraw, modify or qualify) its recommendation in
any manner adverse to M&T or Merger Sub or
(b) publicly approves, endorses or recommends or publicly
proposes to approve, endorse or recommend any alternative
transaction proposal; or
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a third party commences a tender offer or exchange offer for 20%
or more of the outstanding shares of Wilmington Trusts
common stock and Wilmington Trusts Board of Directors
recommends that its stockholders tender their shares in such
tender or exchange offer or otherwise fails to recommend that
such stockholders reject such tender offer within 10 business
days.
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Effect of Termination. If the merger agreement
is terminated, it will become void, and there will be no
liability on the part of M&T or Wilmington Trust, except
that (a) both M&T and Wilmington Trust will remain
liable
5
for any knowing breach of the merger agreement and
(b) designated provisions of the merger agreement,
including with respect to the payment of fees and expenses and
the confidential treatment of information, will survive the
termination.
Termination
Fee (Page 66)
If the merger agreement is terminated under certain
circumstances, including circumstances involving a change in
recommendation by Wilmington Trusts Board of Directors,
Wilmington Trust will be required to pay M&T a termination
fee of $30 million. The termination fee could discourage
other companies from seeking to acquire or merge with Wilmington
Trust.
Regulatory
Approvals Required for the Merger (Page 48)
Each of M&T and Wilmington Trust has agreed to use its
commercially reasonable efforts to obtain all regulatory
approvals required to complete the merger and the other
transactions contemplated by the merger agreement. These
approvals include approval from the Federal Reserve Board, the
New York State Banking Department and the Office of the State
Bank Commissioner of the State of Delaware, among others.
M&T and Wilmington Trust have filed, or are in the process
of filing, applications and notifications to obtain the required
regulatory approvals. Although we do not know of any reason why
we cannot obtain these regulatory approvals in a timely manner,
we cannot be certain when or if we will obtain them.
The
Rights of Wilmington Trust Common Stockholders Following
the Merger Will Be Different (Page 75)
The rights of M&T common stockholders are governed by New
York law and by M&Ts restated certificate of
incorporation and amended and restated bylaws. The rights of
Wilmington Trust common stockholders are governed by Delaware
law, and by Wilmington Trusts restated certificate of
incorporation and amended and restated bylaws. Upon the
completion of the merger, the rights of Wilmington Trust common
stockholders will be governed by New York law, M&Ts
restated certificate of incorporation and amended and restated
bylaws.
The
Parties to the Merger (Page 71)
M&T Bank Corporation
One M&T Plaza
Buffalo, New York 14203
(716) 842-5445
M&T is a New York business corporation which is registered
as a bank holding company under the Bank Holding Company Act of
1956, as amended, and under
Article III-A
of the New York Banking Law. M&T was incorporated in
November 1969. As of September 30, 2010, M&T and its
subsidiaries had consolidated total assets of approximately
$68.2 billion, deposits of approximately $48.7 billion
and stockholders equity of approximately
$8.2 billion. M&T had 12,837 full-time-equivalent
employees at September 30, 2010.
MTB One, Inc.
One M&T Plaza
Buffalo, New York 14203
(716) 842-5445
MTB One, Inc., which we refer to herein as Merger Sub, is a
Delaware corporation and a newly formed wholly owned subsidiary
of M&T. Merger Sub was formed in connection with and for
the purposes of the merger by M&T.
Wilmington Trust Corporation
Rodney Square North
1100 North Market Street
Wilmington, DE
19890-0001
(302) 651-1000
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Wilmington Trust is a financial services holding company that
provides regional banking services throughout the mid-Atlantic
region, and, as of September 30, 2010, Wealth Advisory
services to
high-net
worth clients in 33 countries, and Corporate Client services to
institutional clients in 86 countries. Its wholly owned bank
subsidiary, Wilmington Trust Company, which was founded in
1903, is one of the largest personal trust providers in the
United States and the leading retail and commercial bank in
Delaware. As of September 30, 2010, Wilmington Trust and
its subsidiaries had consolidated total assets of approximately
$10.4 billion, deposits of approximately $8.3 billion
and stockholders equity of approximately
$1.1 billion. Wilmington Trust had
2,796 full-time-equivalent staff members at
September 30, 2010.
RECENT
DEVELOPMENTS
FDIC-Assisted
Acquisition by M&T Bank
On November 5, 2010, M&T Bank, M&Ts
principal banking subsidiary, entered into a purchase and
assumption agreement with the Federal Deposit Insurance
Corporation, or the FDIC, to assume all of the deposits of K
Bank, a Maryland state bank, except certain brokered deposits.
M&T Bank did not pay the FDIC a premium for the deposits of
K Bank. In addition to assuming deposits of the failed bank,
M&T Bank acquired approximately $556 million of
assets. The FDIC and M&T Bank entered into a loss-sharing
agreement with respect to $273 million of K Banks
assets, pursuant to which M&T Bank will share in the losses
on the asset pools covered under the loss-share agreement.
M&T
Fourth Quarter and Fiscal Year 2010 Results
On January 14, 2011, M&T reported its unaudited
preliminary financial results for the full year and quarter
ended December 31, 2010.
M&T reported 2010 net income of $736 million, or
diluted earnings per common share of $5.69, compared with
2009 net income of $380 million, or diluted earnings
per common share of $2.89. M&T also reported fourth quarter
net income of $204 million, compared with net income of
$137 million for the fourth quarter of 2009. Expressed as a
rate of return on average assets and average common
shareholders equity, net income was 1.08% and 9.30%,
respectively, in 2010, compared with 0.56% and 5.07%,
respectively, in 2009. M&T also reported total assets of
approximately $68.0 billion, total deposits of
approximately $49.8 billion and total shareholders
equity of approximately $8.4 billion, each as of
December 31, 2010.
M&T reported that the provision for credit losses was
$85 million during the fourth quarter of 2010, compared
with $145 million in the corresponding 2009 period. Net
charge-offs of loans were $77 million in the fourth quarter
of 2010, compared to $135 million in the fourth quarter of
2009. The provision for credit losses declined 39% to
$368 million for the year ended December 31, 2010 from
$604 million in 2009. Net loan charge-offs in 2010 totaled
$346 million, or 0.67% of average loans outstanding,
compared with $514 million or 1.01% of average loans in
2009. M&Ts allowance for credit losses was
$903 million at December 31, 2010, increased from
$878 million at December 31, 2009 and
$895 million at September 30, 2010. That allowance
expressed as a percentage of outstanding loans was 1.74% at the
recent quarter-end, compared with 1.69% at December 31,
2009 and 1.76% at September 30, 2010.
The foregoing is only a summary and is not intended to be a
comprehensive statement of M&Ts unaudited preliminary
financial results. You should read M&Ts 2010 fourth
quarter and full-year earnings release, which was furnished as
Exhibit 99.1 to the Current Report on
Form 8-K
furnished with the SEC on January 14, 2011 and is
incorporated by reference into this proxy statement/prospectus.
The audit of M&Ts results for the year ended
December 31, 2010 will not be completed until immediately
prior to the filing of M&Ts Annual Report on
Form 10-K
for the year ended December 31, 2010.
Wilmington
Trust Results of Operations
On January 28, 2011, Wilmington Trust announced its results
of operations and financial condition for the 2010 fourth
quarter and fiscal year. Wilmington Trust reported a loss of
$209.3 million for the 2010 fourth quarter
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and a loss of $720.1 million for the 2010 year. After
dividends and accretion on preferred stock, the net loss
available to common stockholders was $213.8 million, or
$2.35 per share, for the 2010 fourth quarter, and
$738.3 million, or $8.45 per share, for the 2010 year.
Fourth
Quarter Results
Wilmington Trust recorded net interest income of
$59.9 million for the 2010 fourth quarter, a decrease of
$7.8 million, or 12%, from the $67.7 million of net
interest income reported for the 2010 third quarter. The
majority of this decline was due to the increase in
nonperforming loans due to continuing negative credit trends.
The protracted recessionary environment continued in the State
of Delaware, as borrowers continued to experience financial
difficulty. Nonperforming assets increased to
$1,145.0 million from $988.6 million reported in the
2010 third quarter, an increase of $156.4 million, or 16%.
Commercial construction loans continued to account for the
majority of problem loans, with most being for residential
projects in Delaware. More borrowers and guarantors exhibited
declining cash flows and net worth, which resulted in the risk
ratings of more loans being downgraded. While the pace of loans
downgraded to substandard or below has declined from the third
quarter, loan quality continues to deteriorate and more loans
have moved to substandard nonaccruing from substandard accruing.
At December 31, 2010, loans rated substandard or below were
$1,867.5 million, $271.7 million less than
$2,139.2 million at September 30, 2010. In contrast,
loans rated substandard or below at September 30, 2010 were
$663.5 million higher than at June 30, 2010. Loans
rated substandard or below were 25% of total loans at
December 31, 2010 and 26% of total loans at
September 30, 2010. The reserve coverage of accruing and
nonaccruing substandard loans was 23.60% at December 31,
2010, as compared to 23.86% at September 30, 2010.
Net charge-offs increased by $60.3 million, or 42%, from
$144.9 million in the 2010 third quarter to
$205.2 million in the 2010 fourth quarter. Commercial
construction loans accounted for most of this increase. During
the fourth quarter, four of Wilmington Trusts largest and
most complex real estate relationships had chargeoffs that
exceeded the amount of their provision for loan losses. Events
driving these charge-offs included changes in workout strategy
from remediation to liquidation, valuation changes, and loans
previously supported by other income-producing properties that
became solely collateral dependent. In addition, a large poultry
processor filed Chapter 11 bankruptcy with the intent to
exit through a sale, and the valuation was adjusted to reflect
Wilmington Trusts net expected proceeds from the sale.
These five relationships comprised $63.8 million of the
$69.6 million amount by which chargeoffs exceeded the
provision for loan losses. Decisions to charge off these loans
were based on evaluations of updated collateral valuations and
assessments of the likelihood of future repayment. Overall, the
provision for loan losses decreased $145.9 million, or 52%,
from $281.5 million in the 2010 third quarter to
$135.6 million.
Noninterest income was $103.7 million for the 2010 fourth
quarter, an increase of $1.1 million, or 1%, from the
$102.6 million of noninterest income reported in the 2010
third quarter. Income earned from advisory fees increased for
the fourth quarter, but was partly offset by an increase in
securities losses.
Noninterest expenses increased from $153.4 million in the
2010 third quarter to $202.6 million for the 2010 fourth
quarter, an increase of $49.2 million, or 32%. These
increases were primarily due to a goodwill impairment of
$24.5 million, of which $3.8 million was for
Wilmington Trusts regional banking segment, due to loan
losses that reduced the valuation of that business, and the
remainder of which was for an affiliate money manager stemming
from a decline in valuation after such money manager reduced its
near-term projections for revenue and managed asset levels from
previously-anticipated levels. Increased noninterest expense
also resulted from a $7.2 million increase in the reserve
for unfunded lending commitments and other-real-estate-owned
write-downs and losses, and $8.3 million of expenses
related to the pending merger with M&T.
Capital levels also declined during the fourth quarter due to
ongoing financial losses. Total risked-based capital declined to
12.29% at December 31, 2010 from 13.69% at
September 30, 2010. The tangible common equity (TCE) ratio
declined to 1.53% from 3.51% and tangible book value per share
declined to $1.76 from $3.84 at the end of the 2010 third
quarter.
During the fourth quarter of 2010, tax expense of
$33.8 million was recorded as a tax valuation allowance,
the majority of which was related to the deferred tax asset
associated with Wilmington Trusts post-retirement benefit
plans. During the annual valuation process of the benefit plans
performed in January 2011 for 2010 year-end, it was
8
determined that the deferred tax asset associated with those
benefit plans had not been included in the consideration of the
valuation allowance recorded in the third quarter of 2010. After
consideration of quantitative and qualitative factors,
Wilmington Trusts management determined that the amount
was not material to Wilmington Trusts financial statements
and thus recorded such amount in the fourth quarter of 2010 when
it was identified.
Fiscal
Year 2010 Results
For 2010, net interest income was $277.1 million, a
decrease of $41.1 million, or 13%, from the
$318.2 million reported for 2009, mainly due to the
increase in nonperforming loans. There was significant
deterioration in the financial condition of many borrowers
throughout 2010. The continued economic downturn, particularly
throughout the State of Delaware, reduced the ability of
borrowers to continue to support multiple real estate projects
and land investments. Declining cash flows and collateral
valuations, liquidity issues, and lower net worth caused
borrowers and guarantors to experience financial distress, which
resulted in downgrades of loans and higher charge-offs
throughout 2010. The provision for loan losses increased
$494.7 million, or 241%, from $205.0 million for 2009
to $699.7 million for 2010. This increase was due to
nonperforming loans, which increased from $484.1 million at
year-end 2009 to $1,053.5 million at the end of 2010, an
increase of $569.4 million, or 118%. In addition,
charge-offs increased $189.3 million, or 75%, from
$251.5 million for 2009 to $440.8 million for 2010.
Total nonperforming assets, which includes loans, loans held for
sale, and other real estate owned, increased from
$518.7 million for 2009 to $1,145.0 million for 2010,
an increase of $626.3 million, or 121%. During 2010,
Wilmington Trusts reserve for loan losses increased from
$251.5 million (2.80% of loans outstanding) to
$440.8 million (5.86% of loans outstanding). Total loans
past due 90 days or more, nonaccruing loans, and
restructured loans increased from $514.7 million (5.74% of
loans outstanding) to $1,110.3 million (14.75% of loans
outstanding).
Noninterest income was $396.7 million, an increase of
$34.0 million, or 9%, from the $362.7 million reported
for 2009, mainly due to lower securities losses and an increase
in advisory fees.
Noninterest expenses increased from $515.6 million in 2009
to $641.7 million in 2010, an increase of
$126.1 million, or 24%. These increases were mainly due to
a goodwill impairment of $24.5 million for an affiliate
money manager and Wilmington Trusts regional banking
segment, $62.7 million to increase the reserve for unfunded
lending commitments and for other-real-estate-owned write-downs
and losses, and $8.3 million of expenses related to the
pending merger with M&T.
Wilmington Trust also recorded a $292.2 million valuation
allowance against its net deferred tax asset, recording
$51.6 million of net tax expense during 2010, because
management does not believe that the tax benefits recorded
previously will be realizable in the future.
Negative credit trends, including higher nonperforming assets,
charge-offs, and provisioning, have driven losses throughout
2010, and put pressure on capital levels. Wilmington
Trusts stockholders equity declined from
$1,307.1 million to $851.7 million, or 35%. Wilmington
Trusts total risk-based capital ratio declined from 14.31%
to 12.29% and its tangible common equity (TCE) ratio declined
from 5.42% to 1.53%. Tangible book value has declined from $8.36
to $1.76. The Tier 1 common equity ratio declined from
6.90% to 3.75%.
Although the TCE ratio and the Tier 1 common equity ratio
are non-GAAP disclosures, Wilmington Trust believes they are
useful tools because they reflect the level of capital
Wilmington Trust has available to withstand unexpected market
conditions. In addition, they are measures that credit rating
agencies and industry analysts use to evaluate Wilmington
Trusts financial condition and capital strength.
Because the TCE ratio and the Tier 1 common equity ratio
are non-GAAP disclosures, some limitations are inherent in their
use. They may not offer relevant comparisons to other companies.
In addition, other companies might calculate these ratios
differently. Consequently, the TCE ratio and the Tier 1
common equity ratio should not be considered in isolation, or as
a substitute for stockholders equity, total assets, or any
other measure calculated in accordance with GAAP. Wilmington
Trust calculates its TCE ratio by using a numerator of
stockholders equity (excluding preferred stock and the
noncontrolling interest) minus the sum of goodwill and other
intangibles. The denominator used is total assets minus the sum
of goodwill and other intangibles. Wilmington Trust calculates
its
9
Tier 1 common equity ratio using a numerator of Tier 1
capital minus preferred stock. The denominator used is total
risk-weighted assets.
Given Wilmington Trusts net losses, credit quality
problems, and continued pressure on capital, without a change in
control transaction acceptable to its regulators, Wilmington
Trust would likely face imminent significant regulatory actions,
which would result in its business prospects likely worsening
dramatically. Any such possible enforcement action by the
regulators could limit the ability to develop new business or
operate existing business, or require Wilmington Trust to raise
additional capital or dispose of certain assets or liabilities
within a prescribed time period, or both. Such regulatory action
could have a material negative effect on Wilmington Trusts
business, operating results, and financial condition.
The foregoing is only a summary and is not intended to be a
comprehensive statement of Wilmington Trusts unaudited
preliminary financial results. You should read Wilmington
Trusts 2010 Fourth Quarter and Full-Year earnings release,
which was filed as Exhibit 99.1 to Wilmington Trusts
Current Report on
Form 8-K
filed with the SEC on January 28, 2011 and is incorporated
by reference into this proxy statement/prospectus. The audit of
Wilmington Trusts results for the year ended
December 31, 2010 will not be completed until immediately
prior to the filing of Wilmington Trusts Annual Report on
Form 10-K
for the year ended December 31, 2010.
Consolidated
Statements of Condition
|
|
|
|
|
|
|
|
|
|
|
As of December 31
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(dollars in thousands)
|
|
|
ASSETS
|
Cash and due from banks
|
|
$
|
153,459
|
|
|
$
|
202,927
|
|
Short-term investments
|
|
|
2,121,824
|
|
|
|
180,533
|
|
Investment securities
|
|
|
624,288
|
|
|
|
887,220
|
|
Loans
|
|
|
7,525,871
|
|
|
|
8,967,162
|
|
Reserve for loan losses
|
|
|
(440,821
|
)
|
|
|
(251,462
|
)
|
|
|
|
|
|
|
|
|
|
Net loans
|
|
|
7,085,050
|
|
|
|
8,715,700
|
|
Other
|
|
|
947,930
|
|
|
|
1,110,751
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
10,932,551
|
|
|
$
|
11,097,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Demand deposits (noninterest-bearing)
|
|
$
|
1,092,617
|
|
|
$
|
1,470,567
|
|
Deposits (Interest-bearing)
|
|
|
7,882,497
|
|
|
|
6,920,307
|
|
Short-term borrowings
|
|
|
123,179
|
|
|
|
603,773
|
|
Other liabilities
|
|
|
387,513
|
|
|
|
352,432
|
|
Long-term debt
|
|
|
595,024
|
|
|
|
442,939
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
10,080,830
|
|
|
|
9,790,018
|
|
Stockholders equity
|
|
|
851,721
|
|
|
|
1,307,113
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
10,932,551
|
|
|
$
|
11,097,131
|
|
|
|
|
|
|
|
|
|
|
10
Consolidated
Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
For the Year Ended December 31
|
|
|
|
Months Ended
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(dollars in thousands, except per share amounts)
|
|
|
Net interest income
|
|
$
|
59,917
|
|
|
$
|
277,109
|
|
|
$
|
318,157
|
|
|
$
|
357,728
|
|
Provision for loan losses
|
|
|
(135,572
|
)
|
|
|
(699,674
|
)
|
|
|
(205,035
|
)
|
|
|
(115,508
|
)
|
Trust and asset management fees
|
|
|
96,620
|
|
|
|
377,612
|
|
|
|
368,257
|
|
|
|
364,548
|
|
Other noninterest revenues
|
|
|
14,764
|
|
|
|
53,215
|
|
|
|
58,256
|
|
|
|
58,398
|
|
Securities losses
|
|
|
(7,666
|
)
|
|
|
(34,120
|
)
|
|
|
(63,855
|
)
|
|
|
(130,585
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noninterest income
|
|
|
103,718
|
|
|
|
396,707
|
|
|
|
362,658
|
|
|
|
292,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest and noninterest (loss)/income
|
|
|
28,063
|
|
|
|
(25,858
|
)
|
|
|
475,780
|
|
|
|
534,581
|
|
Salaries and employment benefits
|
|
|
76,624
|
|
|
|
296,456
|
|
|
|
287,351
|
|
|
|
296,048
|
|
Other operating expenses
|
|
|
101,457
|
|
|
|
320,712
|
|
|
|
228,285
|
|
|
|
196,782
|
|
Goodwill impairment write-down
|
|
|
24,548
|
|
|
|
24,548
|
|
|
|
|
|
|
|
66,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
|
202,629
|
|
|
|
641,716
|
|
|
|
515,636
|
|
|
|
559,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and noncontrolling interest
|
|
|
(174,566
|
)
|
|
|
(667,574
|
)
|
|
|
(39,856
|
)
|
|
|
(25,126
|
)
|
Income tax expense/(benefit)
|
|
|
34,695
|
|
|
|
51,655
|
|
|
|
(36,644
|
)
|
|
|
(1,985
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before noncontrolling interest
|
|
|
(209,261
|
)
|
|
|
(719,229
|
)
|
|
|
(3,212
|
)
|
|
|
(23,141
|
)
|
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
905
|
|
|
|
1,169
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Wilmington Trust Corporation
|
|
|
(209,261
|
)
|
|
|
(720,134
|
)
|
|
|
(4,381
|
)
|
|
|
(23,641
|
)
|
Dividends and accretion on preferred stock
|
|
|
4,551
|
|
|
|
18,205
|
|
|
|
18,276
|
|
|
|
917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common shareholders
|
|
$
|
(213,812
|
)
|
|
$
|
(738,339
|
)
|
|
$
|
(22,657
|
)
|
|
$
|
(24,558
|
)
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.35
|
)
|
|
$
|
(8.45
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.36
|
)
|
Diluted
|
|
$
|
(2.35
|
)
|
|
$
|
(8.45
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.36
|
)
|
Tangible book value(1)
|
|
|
1.76
|
|
|
|
1.76
|
|
|
|
8.36
|
|
|
|
8.82
|
|
Total risk-based capital ratio
|
|
|
12.29
|
|
|
|
12.29
|
|
|
|
14.31
|
|
|
|
13.97
|
|
Tier 1 risk-based capital ratio
|
|
|
7.51
|
|
|
|
7.51
|
|
|
|
9.86
|
|
|
|
9.24
|
|
Tier 1 leverage capital ratio
|
|
|
6.02
|
|
|
|
6.02
|
|
|
|
10.10
|
|
|
|
8.77
|
|
Tangible common equity to assets ratio(1)
|
|
|
1.53
|
|
|
|
1.53
|
|
|
|
5.42
|
|
|
|
5.12
|
|
Tier 1 common capital ratio
|
|
|
3.75
|
|
|
|
3.75
|
|
|
|
6.90
|
|
|
|
6.43
|
|
|
|
|
(1) |
|
Does not include preferred stock and noncontrolling interest |
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Year Ended December 31
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(dollars in thousands)
|
|
|
Credit Quality
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccruing loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
286,137
|
|
|
$
|
80,871
|
|
|
$
|
41,377
|
|
Commercial real estate construction
|
|
|
526,590
|
|
|
|
264,767
|
|
|
|
112,679
|
|
Commercial mortgage
|
|
|
123,971
|
|
|
|
69,037
|
|
|
|
21,717
|
|
Consumer and other retail
|
|
|
72,940
|
|
|
|
40,898
|
|
|
|
20,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonaccruing loans
|
|
|
1,009,638
|
|
|
|
455,573
|
|
|
|
196,429
|
|
Renegotiated loans (accruing)
|
|
|
43,915
|
|
|
|
28,463
|
|
|
|
|
|
Loans held for sale
|
|
|
45,866
|
|
|
|
|
|
|
|
|
|
Other real estate owned
|
|
|
45,579
|
|
|
|
34,637
|
|
|
|
14,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets
|
|
$
|
1,144,998
|
|
|
$
|
518,673
|
|
|
$
|
210,896
|
|
Reserve for loan loss composition
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
140,677
|
|
|
$
|
65,895
|
|
|
$
|
57,468
|
|
Commercial real estate construction
|
|
|
188,520
|
|
|
|
100,829
|
|
|
|
40,073
|
|
Commercial mortgage
|
|
|
61,641
|
|
|
|
40,564
|
|
|
|
18,569
|
|
Consumer and other retail
|
|
|
49,983
|
|
|
|
44,174
|
|
|
|
38,845
|
|
Unallocated
|
|
|
|
|
|
|
|
|
|
|
2,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reserve for loan loss
|
|
$
|
440,821
|
|
|
$
|
251,462
|
|
|
$
|
157,070
|
|
Net charge-offs
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial, agricultural
|
|
$
|
142,077
|
|
|
$
|
34,918
|
|
|
$
|
11,900
|
|
Commercial real estate construction
|
|
|
295,429
|
|
|
|
40,166
|
|
|
|
13,560
|
|
Commercial mortgage
|
|
|
42,194
|
|
|
|
5,669
|
|
|
|
1,225
|
|
Consumer and other retail
|
|
|
30,615
|
|
|
|
31,445
|
|
|
|
25,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net charge-offs
|
|
$
|
510,315
|
|
|
$
|
112,198
|
|
|
$
|
52,354
|
|
Select credit quality ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan loss reserve ratio
|
|
|
5.86
|
%
|
|
|
2.80
|
%
|
|
|
1.63
|
%
|
Nonperforming asset ratio (including OREO and loans held for
sale)
|
|
|
15.02
|
%
|
|
|
5.76
|
%
|
|
|
2.19
|
%
|
Net charge-off ratio
|
|
|
6.06
|
%
|
|
|
1.21
|
%
|
|
|
0.57
|
%
|
12
UNAUDITED
COMPARATIVE PER COMMON SHARE DATA
Unaudited
Comparative Per Common Share Data
The following table sets forth certain historical, pro forma
and pro forma per equivalent share financial
information for M&T and Wilmington Trust. The historical
information is based on historical financial information and
related notes that M&T and Wilmington Trust have presented
in their prior filings with the SEC. You should read the
financial information provided in the following table together
with this historical financial information and related notes.
The historical financial information is also incorporated into
this proxy statement/prospectus by reference. See Where
You Can Find More Information on Page 82 for a
description of where you can find this historical information.
See also Recent Developments on Page 7. The
pro forma and pro forma per equivalent share
information give effect to the merger as if the merger had been
effective on the date presented in the case of the book value
data, and as if the merger had been effective as of
January 1, 2009 in the case of the earnings per share and
the cash dividends data. The pro forma data in the table
assumes that the merger is accounted for using the acquisition
method of accounting treating M&T as the acquirer and is
derived from, and should be read in conjunction with, the
historical consolidated financial statements and related notes
of M&T and Wilmington Trust, which are incorporated in this
document by reference. The pro forma data combine the
historical results of Wilmington Trust into M&Ts
consolidated statement of income and, while certain adjustments
were made for the estimated impact of certain fair valuation
adjustments and other acquisition-related activity, they are not
indicative of what could have occurred had the acquisition taken
place on January 1, 2009. The pro forma
adjustments made are subject to change as additional
information becomes available and as additional analyses are
performed. The pro forma information, while helpful in
illustrating the financial characteristics of the combined
company under one set of assumptions, does not reflect the
impact of factors that may result as a consequence of the merger
or consider any potential impacts of current market conditions
or the merger on revenues, expense efficiencies, asset
dispositions, and share repurchases, among other factors, nor
the impact of possible business model changes. As a result, the
pro forma results are not necessarily indicative of what
would have occurred had the acquisition taken place on the
assumed dates, nor do they represent an attempt to predict or
suggest future results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
Equivalent
|
|
|
|
M&T
|
|
|
WL
|
|
|
Combined(1)
|
|
|
WL Share
|
|
|
Basic Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2010
|
|
$
|
4.12
|
|
|
$
|
(6.09
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(0.02
|
)
|
For the year ended December 31, 2009
|
|
|
2.90
|
|
|
|
(0.33
|
)
|
|
|
2.39
|
|
|
|
0.12
|
|
Diluted Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2010
|
|
$
|
4.10
|
|
|
$
|
(6.09
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
(0.02
|
)
|
For the year ended December 31, 2009
|
|
|
2.89
|
|
|
|
(0.33
|
)
|
|
|
2.39
|
|
|
|
0.12
|
|
Cash Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2010
|
|
$
|
2.10
|
|
|
$
|
0.03
|
|
|
$
|
2.10
|
|
|
$
|
0.11
|
|
For the year ended December 31, 2009
|
|
|
2.80
|
|
|
|
0.365
|
|
|
|
2.80
|
|
|
|
0.14
|
|
Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of nine months ended September 30, 2010
|
|
$
|
62.69
|
|
|
$
|
8.13
|
|
|
$
|
66.31
|
|
|
$
|
3.41
|
|
As of year ended December 31, 2009
|
|
|
59.31
|
|
|
|
14.17
|
|
|
|
65.04
|
|
|
|
3.34
|
|
|
|
|
(1) |
|
Cash dividend amounts are the same as historical because no
change in dividend policy is expected as a result of the merger. |
13
SELECTED
CONSOLIDATED HISTORICAL FINANCIAL DATA OF M&T
Selected
Consolidated Historical Financial Data of M&T
The following table summarizes financial results achieved by
M&T for the periods and at the dates indicated and should
be read in conjunction with M&Ts consolidated
financial statements and the notes to the consolidated financial
statements contained in reports that M&T has previously
filed with the SEC. Historical financial information for
M&T can be found in its Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2010 and its Annual
Report on
Form 10-K
for the year ended December 31, 2009. See Where You
Can Find More Information on Page 82 for instructions
on how to obtain the information that has been incorporated by
reference. See also Recent Developments on
Page 7. Financial amounts as of and for the nine months
ended September 30, 2010 and 2009 are unaudited (and are
not necessarily indicative of the results of operations for the
full year or any other interim period), but management of
M&T believes that such amounts reflect all adjustments
(consisting only of normal recurring adjustments) necessary for
a fair presentation of its results of operations and financial
position as of the dates and for the periods indicated. You
should not assume the results of operations for past periods and
for the nine months ended September 30, 2010 and 2009
indicate results for any future period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the Nine Months
|
|
|
|
|
|
|
Ended September 30,
|
|
|
As of or for the Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except per share data)
|
|
|
Summarized Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
1,693,429
|
|
|
$
|
1,497,029
|
|
|
$
|
2,055,748
|
|
|
$
|
1,939,796
|
|
|
$
|
1,850,237
|
|
|
$
|
1,817,541
|
|
|
$
|
1,794,343
|
|
Provision for credit losses
|
|
|
283,000
|
|
|
|
459,000
|
|
|
|
604,000
|
|
|
|
412,000
|
|
|
|
192,000
|
|
|
|
80,000
|
|
|
|
88,000
|
|
Other income
|
|
|
821,162
|
|
|
|
782,216
|
|
|
|
1,048,106
|
|
|
|
938,979
|
|
|
|
932,989
|
|
|
|
1,045,852
|
|
|
|
949,718
|
|
Other expense
|
|
|
1,445,563
|
|
|
|
1,502,112
|
|
|
|
1,980,563
|
|
|
|
1,726,996
|
|
|
|
1,627,689
|
|
|
|
1,551,751
|
|
|
|
1,485,142
|
|
Income taxes
|
|
|
254,309
|
|
|
|
75,060
|
|
|
|
139,400
|
|
|
|
183,892
|
|
|
|
309,278
|
|
|
|
392,453
|
|
|
|
388,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
531,719
|
|
|
$
|
243,073
|
|
|
$
|
379,891
|
|
|
$
|
555,887
|
|
|
$
|
654,259
|
|
|
$
|
839,189
|
|
|
$
|
782,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common equity
|
|
$
|
493,735
|
|
|
$
|
211,429
|
|
|
$
|
335,680
|
|
|
$
|
555,096
|
|
|
$
|
654,259
|
|
|
$
|
839,189
|
|
|
$
|
782,183
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
|
|
$
|
4.12
|
|
|
$
|
1.84
|
|
|
$
|
2.90
|
|
|
$
|
5.04
|
|
|
$
|
6.05
|
|
|
$
|
7.55
|
|
|
$
|
6.88
|
|
Diluted net income
|
|
|
4.10
|
|
|
|
1.84
|
|
|
|
2.89
|
|
|
|
5.01
|
|
|
|
5.95
|
|
|
|
7.37
|
|
|
|
6.73
|
|
Book value at end of period
|
|
|
62.69
|
|
|
|
58.22
|
|
|
|
59.31
|
|
|
|
56.29
|
|
|
|
58.99
|
|
|
|
56.94
|
|
|
|
52.39
|
|
Cash dividends
|
|
|
2.10
|
|
|
|
2.10
|
|
|
|
2.80
|
|
|
|
2.80
|
|
|
|
2.60
|
|
|
|
2.25
|
|
|
|
1.75
|
|
Weighted Average Number of Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
118,048
|
|
|
|
113,701
|
|
|
|
114,660
|
|
|
|
110,211
|
|
|
|
108,129
|
|
|
|
111,173
|
|
|
|
113,689
|
|
Diluted
|
|
|
118,766
|
|
|
|
113,800
|
|
|
|
114,776
|
|
|
|
110,904
|
|
|
|
110,012
|
|
|
|
113,918
|
|
|
|
116,232
|
|
Average Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
68,338,898
|
|
|
$
|
66,983,865
|
|
|
$
|
67,471,551
|
|
|
$
|
65,132,499
|
|
|
$
|
58,545,310
|
|
|
$
|
55,839,101
|
|
|
$
|
54,134,983
|
|
Total borrowings
|
|
|
11,510,047
|
|
|
|
14,489,606
|
|
|
|
14,003,630
|
|
|
|
17,690,471
|
|
|
|
13,814,354
|
|
|
|
10,542,908
|
|
|
|
11,301,850
|
|
Stockholders equity
|
|
|
8,029,688
|
|
|
|
7,145,197
|
|
|
|
7,281,509
|
|
|
|
6,437,443
|
|
|
|
6,247,274
|
|
|
|
6,041,469
|
|
|
|
5,797,823
|
|
14
SELECTED
CONSOLIDATED HISTORICAL FINANCIAL DATA OF WILMINGTON
TRUST
Selected
Consolidated Historical Financial Data of Wilmington
Trust
The following table summarizes financial results achieved by
Wilmington Trust for the periods and at the dates indicated and
should be read in conjunction with Wilmington Trusts
consolidated financial statements and the notes to the
consolidated financial statements contained in reports that
Wilmington Trust has previously filed with the SEC. Historical
financial information for Wilmington Trust can be found in its
Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2010 and its Annual
Report on
Form 10-K
for the year ended December 31, 2009. See Where You
Can Find More Information on Page 82 for instructions
on how to obtain the information that has been incorporated by
reference. Financial amounts as of and for the nine months ended
September 30, 2010 and 2009 are unaudited (and are not
necessarily indicative of the results of operations for the full
year or any other interim period), but management of Wilmington
Trust believes that such amounts reflect all adjustments
(consisting only of normal recurring adjustments) necessary for
a fair presentation of its results of operations and financial
position as of the dates and for the periods indicated. You
should not assume the results of operations for past periods and
for the nine months ended September 30, 2010 and 2009
indicate results for any future period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of or for the Nine Months
|
|
|
|
|
|
|
Ended September 30,
|
|
|
As of or for the Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except per share data)
|
|
|
Summarized Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
217,192
|
|
|
$
|
240,223
|
|
|
$
|
318,157
|
|
|
$
|
357,727
|
|
|
$
|
368,862
|
|
|
$
|
363,110
|
|
|
$
|
328,854
|
|
Provision for credit losses
|
|
|
564,102
|
|
|
|
122,209
|
|
|
|
205,035
|
|
|
|
115,508
|
|
|
|
28,181
|
|
|
|
21,333
|
|
|
|
11,810
|
|
Other income
|
|
|
292,988
|
|
|
|
261,391
|
|
|
|
359,557
|
|
|
|
292,361
|
|
|
|
385,951
|
|
|
|
346,123
|
|
|
|
313,338
|
|
Other expense
|
|
|
439,087
|
|
|
|
381,954
|
|
|
|
512,535
|
|
|
|
559,707
|
|
|
|
444,104
|
|
|
|
471,624
|
|
|
|
370,144
|
|
Income tax (benefit)/expense & minority interest
|
|
|
17,865
|
|
|
|
(9,351
|
)
|
|
|
(35,475
|
)
|
|
|
(1,487
|
)
|
|
|
100,502
|
|
|
|
72,435
|
|
|
|
93,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income
|
|
$
|
(510,874
|
)
|
|
$
|
6,802
|
|
|
$
|
(4,381
|
)
|
|
$
|
(23,640
|
)
|
|
$
|
182,026
|
|
|
$
|
143,841
|
|
|
$
|
166,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income available to common equity
|
|
$
|
(524,528
|
)
|
|
$
|
(6,814
|
)
|
|
$
|
(22,658
|
)
|
|
$
|
(24,557
|
)
|
|
$
|
182,026
|
|
|
$
|
143,841
|
|
|
$
|
166,929
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net (loss)/income
|
|
$
|
(6.09
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
2.68
|
|
|
$
|
2.10
|
|
|
$
|
2.47
|
|
Diluted net (loss)/income
|
|
|
(6.09
|
)
|
|
|
(0.10
|
)
|
|
|
(0.33
|
)
|
|
|
(0.36
|
)
|
|
|
2.64
|
|
|
|
2.06
|
|
|
|
2.43
|
|
Book value at end of period
|
|
|
8.13
|
|
|
|
14.29
|
|
|
|
14.17
|
|
|
|
14.65
|
|
|
|
16.70
|
|
|
|
15.47
|
|
|
|
14.94
|
|
Cash dividends
|
|
|
0.03
|
|
|
|
0.355
|
|
|
|
0.365
|
|
|
|
1.37
|
|
|
|
1.32
|
|
|
|
1.245
|
|
|
|
1.185
|
|
Weighted Average Number of Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
86,140
|
|
|
|
68,963
|
|
|
|
68,966
|
|
|
|
67,454
|
|
|
|
67,946
|
|
|
|
68,413
|
|
|
|
67,688
|
|
Diluted
|
|
|
86,140
|
|
|
|
68,963
|
|
|
|
68,966
|
|
|
|
67,454
|
|
|
|
68,851
|
|
|
|
69,675
|
|
|
|
68,570
|
|
Average Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
10,696,810
|
|
|
$
|
11,493,131
|
|
|
$
|
11,349,153
|
|
|
$
|
11,881,249
|
|
|
$
|
10,997,368
|
|
|
$
|
10,495,141
|
|
|
$
|
9,802,977
|
|
Total borrowings
|
|
|
790,404
|
|
|
|
1,971,640
|
|
|
|
1,786,275
|
|
|
|
2,301,769
|
|
|
|
1,875,525
|
|
|
|
1,530,197
|
|
|
|
1,513,292
|
|
Stockholders equity
|
|
|
1,474,643
|
|
|
|
1,331,777
|
|
|
|
1,331,627
|
|
|
|
1,103,298
|
|
|
|
1,091,250
|
|
|
|
1,059,360
|
|
|
|
949,521
|
|
15
RISK
FACTORS
In addition to general investment risks and the other
information contained in or incorporated by reference into this
proxy statement/prospectus, including the matters addressed
under the heading Cautionary Statement Regarding
Forward-Looking Statements commencing on Page 20 and
the matters discussed under the caption Risk Factors
in the Annual Reports on
Forms 10-K
filed by M&T and Wilmington Trust, respectively, for the
year ended December 31, 2009, as updated by subsequently
filed
Forms 10-Q
and other reports filed with the SEC, you should carefully
consider the following risk factors in deciding how to vote on
adoption of the merger agreement.
Because
the exchange ratio is fixed and the market price of M&T
common stock will fluctuate, Wilmington Trust common
stockholders cannot be sure of the market value of the merger
consideration they will receive.
Upon completion of the merger, each share of Wilmington Trust
common stock will be converted into the right to receive merger
consideration consisting of 0.051372 of a share of M&T
common stock. The market value of the merger consideration may
vary from the closing price of M&T common stock on the date
we announced the merger, on the date that this proxy
statement/prospectus was mailed to Wilmington Trust
stockholders, on the date of the special meeting of the
Wilmington Trust common stockholders and on the date we complete
the merger and thereafter. Any change in the market price of
M&T common stock prior to completion of the merger will
affect the market value of the merger consideration that
Wilmington Trust common stockholders will receive upon
completion of the merger. Accordingly, at the time of the
special meeting, Wilmington Trust common stockholders will not
know or be able to calculate the market value of the merger
consideration they would receive upon completion of the merger.
Neither M&T nor Wilmington Trust is permitted to terminate
the merger agreement or re-solicit the vote of Wilmington Trust
common stockholders solely because of changes in the market
prices of either companys stock. There will be no
adjustment to the merger consideration for changes in the market
price of either shares of M&T common stock or shares of
Wilmington Trust common stock. Stock price changes may result
from a variety of factors, including general market and economic
conditions, changes in our respective businesses, operations and
prospects, and regulatory considerations. Many of these factors
are beyond our control. You should obtain current market
quotations for shares of M&T common stock and for shares of
Wilmington Trust common stock.
Wilmington
Trust will be subject to business uncertainties and contractual
restrictions while the merger is pending.
Uncertainty about the effect of the merger on employees and
customers may have an adverse effect on Wilmington Trust and
consequently on M&T. These uncertainties may impair
Wilmington Trusts ability to attract, retain and motivate
key personnel until the merger is consummated, and could cause
customers and others that deal with Wilmington Trust to seek to
change existing business relationships with Wilmington Trust.
Retention of certain employees by Wilmington Trust may be
challenging while the merger is pending, as certain employees
may experience uncertainty about their future roles with
M&T. If key employees depart because of issues relating to
the uncertainty and difficulty of integration or a desire not to
remain with M&T, M&Ts business following the
merger could be harmed. In addition, the merger agreement
restricts Wilmington Trust from operating its business other
than in the ordinary course, and prohibits it from taking
specified actions until the merger occurs without the consent of
M&T. These restrictions may prevent Wilmington Trust from
pursuing business opportunities that may arise prior to the
completion of the merger. Please see the section entitled
The Agreement and Plan of Merger Covenants and
Agreements commencing on Page 58 of this proxy
statement/prospectus for a description of the restrictive
covenants applicable to Wilmington Trust.
The
opinions of Wilmington Trusts financial advisors will not
reflect changes in circumstances between the signing of the
merger agreement and the completion of the merger.
Wilmington Trust has not obtained updated opinions from its
financial advisors as of the date of this proxy
statement/prospectus. Changes in the operations and prospects of
Wilmington Trust or M&T, general market and economic
conditions and other factors that may be beyond the control of
Wilmington Trust or M&T, and on which Wilmington
Trusts financial advisors opinions were based, may
significantly alter the value of Wilmington Trust or the prices
of shares of M&T common stock or Wilmington Trust common
stock by the time the merger is completed. The opinions do not
speak as of the time the merger will be completed or as of any
date other than the date of such
16
opinions. Because Wilmington Trust does not currently anticipate
asking its financial advisors to update their opinions, the
opinions will not address the fairness of the exchange ratio
from a financial point of view at the time the merger is
completed. Wilmington Trusts Board of Directors
recommendation that Wilmington Trust common stockholders vote
FOR adoption of the merger agreement, however, is
made as of the date of this proxy statement/prospectus. For a
description of the opinions that Wilmington Trust received from
its financial advisors, please refer to The
Merger Opinions of Wilmington Trusts Financial
Advisors, commencing on Page 37. For a description of
the other factors considered by Wilmington Trusts Board of
Directors in determining to approve the merger and the other
transactions contemplated in the merger agreement, please refer
to The Merger Background of the Merger,
and The Merger Wilmington Trusts Reasons
for the Merger; Recommendation of Wilmington Trusts Board
of Directors, commencing on Page 24 and Page 34,
respectively.
Combining
the two companies may be more difficult, costly or
time-consuming than we expect.
M&T and Wilmington Trust have operated and, until the
completion of the merger, will continue to operate,
independently. It is possible that the integration process could
result in the loss of key employees or disruption of each
companys ongoing business or inconsistencies in standards,
controls, procedures and policies that adversely affect our
ability to maintain relationships with customers and employees
or to achieve the anticipated benefits of the merger. As with
any merger of banking institutions, there also may be business
disruptions that cause us to lose customers or cause customers
to take their deposits out of our banks. The success of the
combined company following the merger may depend in large part
on the ability to integrate the two businesses, business models
and cultures. If we are not able to integrate M&Ts
and Wilmington Trusts operations successfully and in a
timely manner, the expected benefits of the merger may not be
realized.
Regulatory
approvals may not be received, may take longer than expected or
impose conditions that are not presently
anticipated.
Before the merger may be completed, we must obtain various
approvals or consents from the Federal Reserve Board and various
bank regulatory and other authorities. These governmental
entities, including the Federal Reserve Board, may impose
conditions on the completion of the merger or require changes to
the terms of the merger agreement or the manner in which
Wilmington Trust or M&T conducts it business. Although
M&T and Wilmington Trust do not currently expect that any
such conditions or changes would be imposed, there can be no
assurance that they will not be. Such conditions or changes
could have the effect of delaying completion of the merger or
imposing additional costs on or limiting the revenues of
M&T, any of which might have a material adverse effect on
M&T following the merger.
There can be no assurance as to whether the regulatory approvals
will be received, the timing of those approvals, or whether any
conditions will be imposed.
Pending
litigation against Wilmington Trust, the current members of
Wilmington Trusts Board of Directors, one former member of
Wilmington Trusts Board of Directors, M&T and Merger
Sub could result in an injunction preventing completion of the
merger, the payment of damages in the event the merger is
completed and/or may adversely affect the combined
companys business, financial condition or results of
operations following the merger.
In connection with the merger, three purported stockholders of
Wilmington Trust filed putative stockholder class action
lawsuits against Wilmington Trust, the current members of
Wilmington Trusts Board of Directors, one former member of
Wilmington Trusts Board of Directors, M&T and Merger
Sub. Among other relief, the plaintiffs seek to enjoin the
merger. One of the conditions to the closing of the merger is
that no judgment, injunction or decree by any court of competent
jurisdiction is in effect that prohibits the completion of the
merger. If any of the plaintiffs are successful in obtaining an
injunction prohibiting the defendants from completing the
merger, then such injunction may prevent the merger from
becoming effective, or from becoming effective within the
expected time frame. If completion of the merger is prevented or
delayed, it could result in substantial costs to M&T and
Wilmington Trust. In addition, M&T and Wilmington Trust
could incur costs associated with the indemnification of
Wilmington Trusts directors and officers. See The
Merger Litigation Relating to the Merger on
Page 51.
17
If the
merger is not consummated by October 31, 2011, either
M&T or Wilmington Trust may choose not to proceed with the
merger.
Either M&T or Wilmington Trust may terminate the merger
agreement if the merger has not been completed by
October 31, 2011, unless the failure of the merger to be
completed has resulted from the material failure of the party
seeking to terminate the merger agreement to perform its
obligations.
Termination
of the merger agreement could negatively impact Wilmington
Trust.
If the merger agreement is terminated, there may be various
consequences. For example, Wilmington Trusts businesses
may have been impacted adversely by the failure to pursue other
beneficial opportunities due to the focus of management on the
merger, without realizing any of the anticipated benefits of
completing the merger, or the market price of Wilmington Trust
common stock could decline to the extent that the current market
price reflects a market assumption that the merger will be
completed. In addition, termination of the merger agreement
would increase the possibility of downgrades by Wilmington
Trusts credit rating agencies or adverse regulatory
actions which could adversely affect Wilmington Trusts
businesses. If the merger agreement is terminated and Wilmington
Trusts Board of Directors seeks another merger or business
combination, Wilmington Trust stockholders cannot be certain
that Wilmington Trust will be able to find a party willing to
pay an equivalent or greater price than the price M&T has
agreed to pay in the merger.
Some
of the directors and executive officers of Wilmington Trust may
have interests and arrangements that may have influenced their
decisions to support or recommend that you adopt the merger
agreement.
The interests of some of the directors and executive officers of
Wilmington Trust may be different from those of Wilmington Trust
common stockholders, and directors and officers of Wilmington
Trust may be participants in arrangements that are different
from, or in addition to, those of Wilmington Trust common
stockholders. These interests are described in more detail in
the section of this proxy statement/prospectus entitled
The Merger Interests of Wilmington
Trusts Directors and Executive Officers in the
Merger beginning on Page 49.
The
shares of M&T common stock to be received by Wilmington
Trust common stockholders as a result of the merger will have
different rights from the shares of Wilmington Trust common
stock they currently hold.
The rights associated with Wilmington Trust common stock are
different from the rights associated with M&T common stock.
See the section of this proxy statement/prospectus entitled
Comparison of Common Stockholder Rights commencing
on Page 75.
The
market price of M&T common stock after the merger may be
affected by factors different from those affecting Wilmington
Trust common stock or M&T common stock
currently.
The businesses of M&T and Wilmington Trust differ in some
respects and, accordingly, the results of operations of the
combined company and the market price of M&Ts shares
of common stock after the merger may be affected by factors
different from those currently affecting the independent results
of operations and market price of each of M&T or Wilmington
Trust. For a discussion of the businesses of M&T and
Wilmington Trust and of certain factors to consider in
connection with those businesses, see the documents incorporated
by reference into this proxy statement/prospectus and referred
to under Where You Can Find More Information on
Page 82.
We may
fail to realize the cost savings estimated for the
merger.
We estimate that we will achieve cost savings from the merger
when the two companies have been fully integrated. While we
continue to be comfortable with these expectations as of the
date of this proxy statement/prospectus, it is possible that the
estimates of the potential cost savings could turn out to be
incorrect. The cost savings estimates also assume our ability to
combine the businesses of M&T and Wilmington Trust in a
manner that permits those cost savings to be realized. If the
estimates turn out to be incorrect or we are not able to combine
successfully the two companies, the anticipated cost savings may
not be fully realized or realized at all, or may take longer to
realize than expected.
18
Wilmington
Trust common stockholders will have a reduced ownership and
voting interest after the merger and will exercise less
influence over management of the combined
organization.
Wilmington Trusts common stockholders currently have the
right to vote in the election of the Board of Directors of
Wilmington Trust and on other matters affecting Wilmington
Trust. Upon the completion of the merger, each Wilmington Trust
common stockholder that receives shares of M&T common stock
will become a stockholder of M&T with a percentage
ownership of the combined organization that is much smaller than
the stockholders percentage ownership of Wilmington Trust.
It is expected that the former common stockholders of Wilmington
Trust as a group will receive shares in the merger constituting
less than 4% of the outstanding shares of M&T common stock
immediately after the merger. Because of this, Wilmington
Trusts common stockholders will have significantly less
influence on the management and policies of M&T than they
now have on the management and policies of Wilmington Trust.
Recent
legislation regarding the financial services industry may have a
significant adverse effect on our operations.
On July 21, 2010, the Dodd-Frank Wall Street Reform and
Consumer Protection Act, which we refer to as the Dodd-Frank
Act, was signed into law. The Dodd-Frank Act implements a
variety of far-reaching changes and has been called the most
sweeping reform of the financial services industry since the
1930s. Many of the provisions of the Dodd-Frank Act will
directly affect M&Ts ability to conduct its business,
including:
|
|
|
|
|
Imposition of higher prudential standards, including more
stringent risk-based capital, leverage, liquidity and
risk-management requirements, and numerous other requirements on
systemically significant institutions, currently
defined to include, among other things, all bank holding
companies with assets of at least $50 billion (which would
include M&T);
|
|
|
|
Mandates requiring the Federal Reserve to establish standards
for determining whether interchange fees charged by certain
financial institutions are reasonable and proportional to the
costs incurred by such institution;
|
|
|
|
Repeal of the federal prohibitions on the payment of interest on
demand deposits, thereby permitting depository institutions to
pay interest on business transaction and other accounts;
|
|
|
|
Increase in the FDIC assessment for depository institutions with
assets of $10 billion or more and increases in the minimum
reserve ratio for the deposit insurance fund;
|
|
|
|
Imposition of additional costs and fees, including fees to be
set by the Federal Reserve and charged to systemically
significant institutions to cover the cost of regulating
such institutions and any FDIC assessment made to cover the
costs of any regular or special examination of M&T or its
affiliates;
|
|
|
|
Establishment of a consumer financial protection bureau with
broad authority to implement new consumer protection regulations
and, for bank holding companies with $10 billion or more in
assets, to examine and enforce compliance with federal consumer
laws;
|
|
|
|
Application to bank holding companies above $15 billion in
assets of regulatory capital requirements similar to those
applied to banks, which requirements exclude, on a phase-out
basis, all trust preferred securities and cumulative preferred
securities from Tier 1 capital (except for preferred stock
issued under the TARP, which will continue to qualify as
Tier 1 capital as long as it remains outstanding); and
|
|
|
|
Establishment of new rules and restrictions regarding the
origination of mortgages.
|
Many provisions in the Dodd-Frank Act remain subject to
regulatory rule-making and implementation, the effects of which
are not yet known, including mandates requiring the Federal
Reserve to establish compensation guidelines covering regulated
financial institutions. The provisions of the Dodd-Frank Act and
any rules adopted to implement those provisions as well as any
additional legislative or regulatory changes may impact the
profitability of M&Ts business activities, may
require that M&T change certain of its business practices,
may materially affect its business model or affect retention of
key personnel, may require M&T to raise additional
regulatory capital and could expose M&T to additional costs
(including increased compliance costs). These and other changes
may also require M&T to invest significant management
attention and resources to make any necessary changes and may
19
adversely affect its ability to conduct its business as
previously conducted or its results of operations or financial
condition.
M&T
may be subject to more stringent capital
requirements.
As discussed above, the Dodd-Frank Act would require the federal
banking agencies to establish stricter risk-based capital
requirements and leverage limits to apply to banks and bank
holding companies. Under the legislation, the federal banking
agencies would be required to develop capital requirements that
address systemically risky activities. The capital rules must
address, at a minimum, risks arising from significant volumes of
activity in derivatives, securitized products, financial
guarantees, securities borrowing and lending and repurchase
agreements; concentrations in assets for which reported values
are based on models; and concentrations in market share for any
activity that would substantially disrupt financial markets if
the institutions were forced to unexpectedly cease the activity.
These requirements, and any other new regulations, could
adversely affect M&Ts ability to pay dividends, or
could require M&T to reduce business levels or to raise
capital, including in ways that may adversely affect its results
of operations or financial condition.
In addition, on September 12, 2010, the Group of Governors
and Heads of Supervisors of the Basel Committee on Banking
Supervision, the oversight body of the Basel Committee,
published its calibrated capital standards for major
banking institutions, known as Basel III. Under these standards,
when fully phased in on January 1, 2019, banking
institutions will be required to maintain heightened Tier 1
common equity, Tier 1 capital and total capital ratios, as
well as maintaining a capital conservation buffer.
The Tier 1 common equity and Tier 1 capital ratio
requirements will be phased in incrementally between
January 1, 2013 and January 1, 2015; the deductions
from common equity made in calculating Tier 1 common equity
(for example, for mortgage servicing assets, deferred tax assets
and investments in unconsolidated financial institutions) will
be phased in incrementally over a four-year period commencing on
January 1, 2014; and the capital conservation buffer will
be phased in incrementally between January 1, 2016 and
January 1, 2019. The Basel Committee also announced that a
countercyclical buffer of 0% to 2.5% of common
equity or other fully loss-absorbing capital will be
implemented according to national circumstances as an
extension of the conservation buffer. The release
does not address the Basel Committees two liquidity
measures initially proposed in December 2009 and amended in July
2010 the Liquidity Coverage Ratio and Net Stable
Funding Ratio other than to state that the Liquidity
Coverage Ratio will be introduced on January 1, 2015 and
the Net Stable Funding Ratio will be significantly revised and
move[d] to a minimum standard by January 1,
2018. The text of the final Basel III capital and
liquidity rules was published on December 16, 2010 and is
now subject to individual adoption by member nations, including
the United States.
The ultimate impact of the new capital and liquidity standards
cannot be determined at this time and will depend on a number of
factors, including treatment and implementation by the
U.S. banking regulators.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained or incorporated by reference
into this proxy statement/prospectus contain forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act giving M&Ts or Wilmington
Trusts expectations or predictions of future financial or
business performance or conditions. Forward-looking statements
are typically identified by words such as believe,
expect, anticipate, intend,
target, estimate, continue,
positions, prospects or
potential, by future conditional verbs such as
will, would, should,
could or may, or by variations of such
words or by similar expressions. These forward-looking
statements are subject to numerous assumptions, risks and
uncertainties which change over time. Forward-looking statements
speak only as of the date they are made and we assume no duty to
update forward-looking statements.
In addition to factors previously disclosed in M&Ts
and Wilmington Trusts reports filed with the SEC and those
identified elsewhere in this proxy statement/prospectus, the
following factors, among others, could cause actual results to
differ materially from forward-looking statements or historical
performance:
|
|
|
|
|
fluctuations in the market price of M&T common stock and
the related effect on the market value of the merger
consideration that Wilmington Trust common stockholders will
receive upon completion of the merger;
|
|
|
|
business uncertainties and contractual restrictions while the
merger is pending;
|
20
|
|
|
|
|
changes in circumstances between the signing of the merger
agreement and the completion of the merger, which will not be
reflected in the opinions obtained by Wilmington Trust from its
financial advisors;
|
|
|
|
ability to obtain regulatory approvals and meet other closing
conditions to the merger, including approval by Wilmington Trust
stockholders, on the expected terms and schedule;
|
|
|
|
delay in closing the merger; difficulties and delays in
integrating the M&T and Wilmington Trust businesses or
fully realizing cost savings and other benefits;
|
|
|
|
business disruption following the merger;
|
|
|
|
changes in asset quality and credit risk;
|
|
|
|
the inability to sustain revenue and earnings growth;
|
|
|
|
potential negative impacts on Wilmington Trust if the merger
agreement is terminated;
|
|
|
|
changes in interest rates and capital markets;
|
|
|
|
inflation;
|
|
|
|
customer acceptance of M&T products and services;
|
|
|
|
customer borrowing, repayment, investment and deposit practices;
|
|
|
|
customer disintermediation;
|
|
|
|
the introduction, withdrawal, success and timing of business
initiatives;
|
|
|
|
competitive conditions;
|
|
|
|
the exposure of litigation, including the possibility that
litigation related to the merger agreement and related
transactions could delay or impede completion of the merger;
|
|
|
|
the inability to maintain relationships with customers and key
employees;
|
|
|
|
the inability to realize cost savings or revenues or to
implement integration plans and other consequences associated
with the merger;
|
|
|
|
economic conditions;
|
|
|
|
the reduced ownership percentage and voting interest that
Wilmington Trust common stockholders will have in the combined
organization following completion of the merger;
|
|
|
|
the impact, extent and timing of technological changes, capital
management activities, and other actions of the Federal Reserve
Board and legislative and regulatory actions and reforms,
including those associated with the Dodd-Frank Act; and
|
|
|
|
the factors set forth in or incorporated by reference into this
proxy statement/prospectus in the section entitled Risk
Factors beginning on Page 16.
|
Additional factors that could cause M&Ts or
Wilmington Trusts results to differ materially from those
described in the forward-looking statements can be found in
M&Ts and Wilmington Trusts Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K
filed with the SEC. See Where You Can Find More
Information on Page 82 for a description of where you
can find this information. All subsequent written and oral
forward-looking statements concerning the proposed transaction
or other matters and attributable to M&T or Wilmington
Trust or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements
contained or referred to within this proxy statement/prospectus.
Forward-looking statements speak only as of the date on which
such statements are made. M&T and Wilmington Trust
undertake no obligation to update any forward-looking statement
to reflect events or circumstances after the date on which such
statement is made, or to reflect the occurrence of unanticipated
events.
21
WILMINGTON
TRUST SPECIAL MEETING
This section contains information from Wilmington Trust for
Wilmington Trust common stockholders about the special meeting
Wilmington Trust has called for common stockholders to consider
and vote upon a proposal to adopt the merger agreement. We are
mailing this proxy statement/prospectus to you, as a Wilmington
Trust common stockholder, on or about February 14, 2011.
Together with this proxy statement/prospectus, we are also
sending to you a notice of the special meeting of Wilmington
Trust common stockholders and a form of proxy card that
Wilmington Trusts Board of Directors is soliciting for use
at the special meeting and at any adjournments, postponements or
continuations of the special meeting. The special meeting will
be held at Wilmington Trust Plaza, Mezzanine Level,
301 West Eleventh Street, Wilmington, Delaware on
March 22, 2011, at 10:00 a.m. local time.
This proxy statement/prospectus is also being furnished by
M&T to Wilmington Trust common stockholders as a prospectus
in connection with the issuance of shares of M&T common
stock upon completion of the merger.
Matters
to Be Considered
The only matters to be considered at the Wilmington Trust
special meeting are the adoption of the merger agreement and a
proposal to adjourn, postpone or continue the special meeting.
Wilmington Trust could use any adjournment, postponement or
continuation of the special meeting, if necessary, to permit
more time to solicit votes in favor of adoption of the merger
agreement.
Recommendation
of Wilmington Trusts Board of Directors
Wilmington Trusts Board of Directors has unanimously
declared advisable the merger agreement and the transactions
contemplated thereby, including the merger, and recommends that
Wilmington Trust common stockholders vote FOR the
adoption of the merger agreement, and FOR the
approval of the adjournment, postponement or continuation of the
special meeting, if necessary, to solicit additional proxies in
favor of the adoption of the merger agreement.
Record
Date
Wilmington Trusts Board of Directors has fixed the close
of business on February 9, 2011 as the record date for
determining the Wilmington Trust common stockholders entitled to
receive notice of and to vote at the special meeting. Only
Wilmington Trust common stockholders of record as of the record
date are entitled to and are being requested to vote at the
special meeting. As of the record date, 91,423,333 shares
of Wilmington Trust common stock were issued and outstanding and
held by approximately 7,323 record holders. Wilmington Trust
common stockholders are entitled to one vote on each matter
considered and voted on at the special meeting for each share of
Wilmington Trust common stock held of record at the close of
business on the record date.
Quorum
The presence, in person or by properly executed proxy, of the
holders of a majority of the shares of Wilmington Trust common
stock entitled to vote at the special meeting is necessary to
constitute a quorum at the special meeting. For purposes of
determining the presence of a quorum, abstentions and broker
non-votes will be counted as shares present. Abstentions and
broker non-votes will have the same effect as votes against
adoption of the merger agreement. A broker non-vote
occurs when a nominee holding shares for a beneficial owner does
not receive instructions with respect to the merger proposal
from the beneficial owner.
Required
Vote
The merger agreement must be adopted by the affirmative vote of
the holders of a majority of the outstanding shares of
Wilmington Trust common stock entitled to vote on the matter.
The holder of Wilmington Trusts preferred stock is not
entitled to and is not being requested to vote at the Wilmington
Trust special meeting. The merger agreement and the consummation
of the transactions contemplated therein will not require the
approval of the holders of M&T common stock under the New
York Business Corporation Law or the rules of the NYSE. Approval
of the proposal to adjourn, postpone or continue the special
meeting, if necessary for the purpose of soliciting additional
proxies, requires the affirmative vote of the holders of a
majority of the outstanding shares of Wilmington Trust common
stock entitled to vote on the matter.
22
Stock
Ownership of Directors and Officers
As of the record date, Wilmington Trust directors and executive
officers and their affiliates held approximately
905,093 shares (or approximately 1% of the outstanding
shares) of Wilmington Trust common stock entitled to vote at the
special meeting.
As of the record date, M&T and its subsidiaries held no
shares of Wilmington Trust common stock (other than shares held
as fiduciary, custodian or agent as described below) and its
directors and executive officers or their affiliates held or had
the power to direct approximately 655 shares (or less than
1% of the outstanding shares) of Wilmington Trust common stock.
See The Merger Interests of Wilmington
Trusts Directors and Executive Officers in the
Merger commencing on Page 49. As of the record date,
subsidiaries of M&T, as fiduciaries, custodians or agents,
held a total of approximately 5,565 shares of Wilmington
Trust common stock, representing less than 1% of the shares
entitled to vote at the Wilmington Trust special meeting, and
maintained sole or shared voting power over none of these shares.
Proxies
Each copy of this document mailed to holders of Wilmington Trust
common stock is accompanied by a form of proxy with instructions
for voting. If you hold stock in your name as a stockholder of
record, you may complete, sign, date and mail your proxy card in
the enclosed postage-paid return envelope as soon as possible,
vote by telephone by calling the toll-free number listed on the
proxy card, vote by accessing the Internet site listed on the
proxy card or vote in person at the Wilmington Trust special
meeting. If you hold your stock in street name
through a bank or broker, you must direct your bank or broker to
vote in accordance with the instruction form provided by your
bank or broker included with these materials. This voting
instruction form provides instructions on voting by mail,
telephone or the Internet. To vote using the proxy card, you
must sign, date and return it in the enclosed postage-paid
envelope. Instructions on how to vote by telephone or by the
Internet are included with your proxy card.
Shares of Wilmington Trust common stock represented by properly
executed proxies will be voted in accordance with the
instructions indicated on the enclosed proxy cards. If no
instructions are indicated, such proxies will be voted
FOR adoption of the merger agreement, and
FOR any motion to adjourn, postpone or continue the
special meeting, if necessary, to solicit additional proxies in
favor of adoption of the merger agreement.
Revocation
of Proxies
A Wilmington Trust common stockholder who is a stockholder of
record and has given a proxy may revoke it at any time before
its exercise at the special meeting by (i) giving written
notice of revocation to Wilmington Trusts Corporate
Secretary, (ii) properly submitting to Wilmington Trust a
duly executed proxy bearing a later date or (iii) attending
the special meeting and voting in person. If you hold your
shares in street name through a bank or broker, you
should contact your bank or broker to revoke your proxy. Any
written notices of revocation and other communications with
respect to revocation of proxies should be addressed to
Wilmington Trust as follows: Rodney Square North, 1100
North Market Street, Wilmington, DE
19890-0001,
and must be received by 11:59 p.m., Eastern Standard Time,
on March 21, 2011, or the day before the meeting date, if
the special meeting is adjourned, postponed or continued.
Proxies may also be revoked via the Internet or telephone
following the instructions on your proxy card.
Solicitation
of Proxies
The costs and expenses of printing and mailing this proxy
statement/prospectus will be borne equally by Wilmington Trust
and M&T, and Wilmington Trust will bear all other costs
incurred by it in the solicitation of proxies from its
stockholders on behalf of its Board of Directors. In addition to
solicitation of proxies by mail, Wilmington Trust will request
that banks, brokers and other record holders send proxies and
proxy materials to the beneficial owners of Wilmington Trust
common stock and secure their voting instructions. Wilmington
Trust will reimburse the record holders for their reasonable
expenses in taking those actions. Wilmington Trust has also made
arrangements with Morrow & Co., LLC, a proxy
solicitation firm, to assist it in soliciting proxies and has
agreed to pay them approximately $50,000 plus reasonable
expenses for these services. Wilmington Trust may use its
directors, officers and employees, who will not be specially
compensated, to solicit proxies from Wilmington Trust
stockholders, either personally or by telephone, facsimile,
letter or other electronic means.
23
THE
MERGER
The following discussion contains material information about
the merger. The discussion is subject, and qualified in its
entirety by reference, to the merger agreement included as
Annex A to this document. We urge you to read carefully
this entire document, including the merger agreement included as
Annex A to this document, for a more complete understanding
of the merger.
Terms of
the Merger
Each of the M&T Board of Directors and Wilmington
Trusts Board of Directors has approved and adopted or
declared advisable the merger agreement, which provides for the
merger of Merger Sub with and into Wilmington Trust, with
Wilmington Trust being the surviving corporation in the merger
and a wholly owned subsidiary of M&T. Each share of
Wilmington Trust common stock, par value $1.00 per share, issued
and outstanding immediately prior to the completion of the
merger, except for specified shares of Wilmington Trust common
stock held by Wilmington Trust or M&T, will be converted
into the right to receive 0.051372 of a share of M&T common
stock.
Wilmington Trust common stockholders are being asked to adopt
the merger agreement.
Background
of the Merger
During 2008, downward economic trends nationally and in the
mid-Atlantic region began to have a negative effect on
Wilmington Trust. Market interest rates fell to historic lows,
financial markets experienced extreme volatility, capital
markets froze, and consumer confidence stalled. For Wilmington
Trust, these negative trends resulted in higher loan repayment
problems, increased loan loss provisions, losses on investment
securities, and impairment losses for an investment affiliate.
As a consequence, Wilmington Trust recorded a loss of
$23.6 million for 2008. To enhance its capital position,
Wilmington Trust issued $330 million of Series A
Preferred Stock to the U.S. Department of the Treasury, or
U.S. Treasury, in December 2008 under the TARP Capital Purchase
Program. Shortly thereafter, Moodys and S&P
downgraded Wilmington Trusts credit ratings, citing the
likelihood of increasing nonperforming assets, higher
charge-offs, and intensifying recessionary pressures.
Recessionary pressures continued to affect all of Wilmington
Trusts business lines negatively during 2009, resulting in
reduced revenue for Wilmington Trust and, in its regional
banking business, compressed margins and higher levels of
nonperforming loans and loan losses. During the second half of
2009, sluggish economic conditions continued to pressure
commercial borrowers, lower real estate values, and affect
collateral values adversely, especially with respect to
Wilmington Trusts real estate construction loans, which
are concentrated in the State of Delaware. Loan demand dropped,
further impacting Wilmington Trusts profitability. In
addition to reducing net interest income, the low interest rate
environment reduced management fees on money market mutual funds.
In response to the deteriorating economic environment during
2009 and to conserve capital, Wilmington Trusts Board of
Directors reduced the amount of its quarterly cash dividends on
Wilmington Trusts common stock by 50% in January 2009 to
$0.1725 per common share, and further reduced the dividend in
July 2009 to $0.01 per common share. Wilmington Trusts
credit ratings were downgraded again in the second quarter of
2009 and again in late 2009.
During 2009, Wilmington Trust also became subject to increased
regulatory requirements. At the request of its regulators,
Wilmington Trust implemented plans: to enhance the independence
and the effectiveness of its loan review, credit policy, and
credit analysis functions; address liquidity management and
current and future capital requirements; improve its position on
nonperforming loans; and improve its credit risk management.
Although Wilmington Trusts regulatory capital ratios
continued to exceed the minimums set by the Federal Reserve for
a bank to be considered well-capitalized, in the third quarter
of 2009, Wilmington Trust agreed with its regulators that it
would not purchase or redeem its common or preferred stock, or
incur any debt, subject to certain exceptions, without the prior
approval of its regulators.
Wilmington Trust concluded 2009 with a net loss of
$4.4 million for the year, based in part on higher levels
of nonperforming loans and loan losses. Wilmington Trusts
loan loss provision was $205.0 million for 2009, compared
to $115.5 million for 2008. Nonperforming loans increased
from $210.9 million at December 31, 2008 to
24
$518.7 million at December 31, 2009. Wilmington
Trusts credit ratings were downgraded again in the first
quarter of 2010 after it reported these financial results.
As a consequence of these developments, Wilmington Trusts
Board of Directors and management considered additional ways to
address these issues and improve Wilmington Trusts capital
and liquidity positions. In March 2010, Wilmington Trust
completed an underwritten public offering of
21,706,250 shares of its common stock. This offering raised
$274.0 million of net proceeds, which qualified as both
tangible common equity and regulatory Tier 1 capital. The
proceeds of the offering were used for general corporate
purposes, and, following the offering, on March 31, 2010,
Wilmington Trust contributed $175.0 million of capital to
Wilmington Trust Company, one of its wholly owned bank
subsidiaries. Wilmington Trust contributed an additional
$200 million to Wilmington Trust Company on
September 30, 2010. Wilmington Trust also contributed
$25.0 million of capital to Wilmington Trust FSB on
September 13, 2010.
Wilmington Trusts economic challenges continued in 2010.
For the first quarter of 2010, Wilmington Trust reported a
$29.2 million net loss due, in part, to a
$77.4 million loan loss provision for the quarter relating
primarily to past-due and nonperforming loans, as well as
continued uncertainty about the performance of its commercial
loans.
The extent and duration of the recession continued to affect the
credit quality of Wilmington Trusts loan portfolio in the
second quarter of 2010. Collateral values continued to decline
significantly, particularly in southern Delaware, and many of
Wilmington Trusts borrowers continued to experience
financial difficulty. While most of the problems continued to be
in the commercial real estate/construction portfolio,
deterioration was also increasing in other commercial
portfolios. In response to these conditions, Wilmington Trust
reevaluated collateral values, refined its risk rating
designations, and revised some of the credit quality factors on
its performing loan portfolio. The company hired Robert P.
Gehring, a
39-year
industry veteran, as Vice President, to head Wilmington
Trusts Credit Risk Management Division. Wilmington Trust
also engaged a third-party credit consultant to perform select
independent asset quality reviews, review credit policies,
review the loan loss reserve methodology and nonaccrual policy,
and comment on stress testing. The combined effects of lower
collateral values, increased delinquencies, and the continued
intensity of the recession caused increases in charge-offs and
non-accruing loans, internal risk rating downgrades, and an
increase in the reserve for loan losses. As a result, Wilmington
Trust reported a net loss of $116.4 million for the second
quarter of 2010 due, in part, to a $205.2 million loan loss
provision for the quarter relating to past-due and nonperforming
loans, as well as continued uncertainty about the performance
status of its commercial loans. Net charge-offs increased from
$29.1 million in the first quarter of 2010 to
$131.2 million in the second quarter of 2010. Credits rated
substandard or below increased by $345.0 million during the
second quarter, reflecting deteriorating collateral values,
sluggish residential home sales, and weakening financial
performance of borrowers.
On June 3, 2010, Wilmington Trust announced the retirement
of its Chief Executive Officer, Ted T. Cecala, and the election
by Wilmington Trusts Board of Directors of Donald E. Foley
as Chief Executive Officer of Wilmington Trust to succeed
Mr. Cecala. Mr. Foley had been a member of Wilmington
Trusts Board of Directors since July 2006, and chaired its
Audit Committee since April 2008. Wilmington Trusts Board
of Directors elected Mr. Foley to serve as Chairman of the
Board of Directors on July 21, 2010. Mr. Foley and the
rest of Wilmington Trusts management continued to review
Wilmington Trusts challenging commercial loan portfolio
and examined means of improving risk management and credit
control. As part of this process, Mr. Foley implemented
certain management changes in August 2010, including hiring
Carol Baldwin Moody, a
25-year
industry veteran, as Senior Vice President and Chief Risk
Officer, to head the newly centralized Enterprise Risk
Management Division reporting to the Chief Executive Officer and
working closely with a newly-formed Risk Management Committee of
Wilmington Trusts Board of Directors. In October 2010,
Wilmington Trust hired James D. Naber, who has more than
30 years of financial, management, and regulatory
consulting experience in the banking and financial services
sector, as Wilmington Trusts Chief Audit Executive.
Management also began to examine the potential for sales of loan
portfolios and other assets, and other means of increasing
liquidity and improving Wilmington Trusts capital position.
The protracted recessionary environment continued to affect
Wilmington Trust negatively during the third quarter of 2010.
Increasing numbers of borrowers were experiencing weakened
financial conditions. Collateral valuations continued to
decline, and cash flows ebbed. More borrowers could not
demonstrate the ability to repay all principal and interest on
their loans. These conditions prompted management to downgrade
loan risk ratings,
25
transfer more loans to non-accruing status, charge off more
loans, and increase the reserve for loan losses. Wilmington
Trust also retained a third-party credit consultant to perform
loan reviews to supplement its credit review group in its
evaluation of its loan portfolio, specifically to evaluate the
classification of Wilmington Trusts loans and make
recommendations to management regarding any reclassifications.
As a result of increased regulatory oversight, starting in
August 2010: (i) Wilmington Trust was prohibited from
appointing directors or senior executive officers of Wilmington
Trust or its bank subsidiaries, or making severance payments to
former directors or staff members, without the prior approval of
its regulators; (ii) Wilmington Trust FSB was made
subject to certain limits on its asset growth, and prohibited
from entering into or modifying contractual arrangements related
to compensation or benefits or third-party contracts outside the
ordinary course of business without the prior approval of its
regulators; (iii) Wilmington Trust was advised that its
regulators may give notice in the future that increases in
national brokered CDs for its bank subsidiaries would not be
allowed, and that those bank subsidiaries would not be permitted
to roll over existing national brokered CDs without the prior
approval of its regulators.
On August 18 and August 22, 2010, Wilmington Trusts
Board of Directors met telephonically with management and Pepper
Hamilton LLP, special counsel to its independent directors. At
these meetings, management updated Wilmington Trusts Board
of Directors on the state of Wilmington Trusts asset
quality, loan loss allowance, and non-performing assets.
Wilmington Trusts Board of Directors discussed the status
of Wilmington Trusts loan portfolio review by management
and the third-party consultant, and alternatives available to
improve Wilmington Trusts capital and liquidity position,
including a possible sale of loan portfolios or other assets or
a capital investment by a third party.
On or about August 27, 2010, Wilmington Trusts
management initiated discussions with a financial institution,
referred to as Party A, regarding a potential capital investment
in Wilmington Trust. Wilmington Trust entered into a
confidentiality agreement with Party A on September 2,
2010. This confidentiality agreement provided Party A with an
exclusivity period through September 20, 2010 in which to
conduct due diligence and submit a proposal with respect to an
investment in Wilmington Trust. During this period, management
also initiated discussions with a financial investor, referred
to as Party B, regarding a possible loan portfolio sale, and
entered into a confidentiality agreement with Party B on
September 13, 2010. Party A and Party B commenced their
respective due diligence reviews of Wilmington Trust in early
September.
Wilmington Trusts Board of Directors continued its
discussions of the issues confronting Wilmington Trust during
telephonic meetings on September 1 and 2, 2010, and at its
regularly scheduled in-person meetings held on September 8 and
9, 2010. At the September 8 meeting, management delivered a
presentation to Wilmington Trusts Board of Directors
regarding the credit challenges facing Wilmington Trust,
including the problems associated with the severe reduction in
the value of collateral associated with many of its commercial
loans, particularly in southern Delaware, and the deterioration
in the financial condition of many of the borrowers and
guarantors on its loans. Management also reviewed its credit
strategies with Wilmington Trusts Board of Directors. At
that meeting, management advised Wilmington Trusts Board
of Directors that the loan loss provisions for the third quarter
of 2010 likely would be larger than in previous periods.
Wilmington Trusts Board of Directors and management
discussed the worsening economic and market conditions in the
mid-Atlantic region and their implications on Wilmington
Trusts businesses and its ability to seek capital-raising
and/or other
strategic transactions. Among other things, Wilmington
Trusts Board of Directors considered the difficulties of
obtaining such capital in an expedited manner and the regulatory
requirements for approving such transactions. Following this
meeting of Wilmington Trusts Board of Directors, on
September 17, 2010, Wilmington Trust retained Skadden,
Arps, Slate, Meagher & Flom LLP, referred to as
Skadden Arps, as its legal counsel to advise Wilmington Trust
with respect to various strategic alternatives it may consider.
Wilmington Trust created an electronic data room and continued
to engage in management discussions and due diligence with Party
A.
At a September 19, 2010 telephonic meeting of Wilmington
Trusts Board of Directors, Wilmington Trusts
management described several options to raise additional capital
and provide Wilmington Trust with additional liquidity,
including an equity investment by Party A, the sale of a portion
of its commercial loan portfolio to Party B, and the possible
sale of certain other assets. Management described its
continuing discussions with Party B, which had continued its due
diligence review of Wilmington Trusts loan portfolio, and
discussed with management a proposal to purchase a portion of
the loan portfolio. As the third quarter neared its close,
management advised Wilmington Trusts Board of Directors
that the loan loss provisions would be substantially greater
than in previous
26
periods, and that a partial equity investment in Wilmington
Trust would likely not be sufficient to alleviate its financial
problems.
On September 20, 2010, Wilmington Trust engaged a financial
advisor to provide an opinion in connection with a proposed sale
of a portion of the commercial loan portfolio should a
transaction with Party B come to fruition. In connection with
this engagement, this financial advisor agreed to conduct a
valuation analysis of a portion of Wilmington Trusts loan
portfolio by performing commercial loan underwriting for an
agreed-upon
sampling of the assets included in the portfolio.
Party B continued to perform its due diligence on Wilmington
Trusts loan portfolio through mid-September, and Party A
also continued its due diligence efforts throughout September
and indicated that it would be interested in making an equity
investment in Wilmington Trust on terms and in an amount to be
determined.
Party As exclusivity period was to expire on
September 20, 2010, and it therefore requested an
additional two weeks of exclusivity. Wilmington Trusts
Board of Directors was unwilling to extend exclusivity for two
weeks, but instead agreed to extend Party As exclusivity
through September 27, 2010. Wilmington Trusts Board
of Directors met telephonically on September 22, 2010 to
discuss strategic alternatives with management and its legal
counsel, and invited representatives from Lazard
Frères & Co. LLC, referred to as Lazard, to make
a presentation to Wilmington Trusts Board of Directors on
strategic alternatives that might be available to Wilmington
Trust in light of the current circumstances. Wilmington
Trusts Board of Directors discussed the possibility of
pursuing strategic alternatives and the stockholder and
regulatory approvals that would be required in any such
transaction.
On September 23, 2010, Mr. Foley met with
representatives of Party A. Party A indicated that it would
continue its due diligence review, including a
loan-by-loan
review of Wilmington Trusts commercial loan portfolio, and
that it intended to deliver a proposal in early October, with a
formal bid to follow on October 15th. Party A indicated
that, if the parties determined to proceed, it would expect to
be in a position to publicly announce a transaction by the end
of October.
Also on September 23, 2010, management received a
nonbinding written proposal from Party B with respect to its
purchase of a portion of Wilmington Trusts commercial loan
portfolio. This proposal contained certain provisions, including
deferred payments and downside protections for Party B on the
loan portfolio which, together with the accounting treatment for
the proposed transaction, led Wilmington Trusts Board of
Directors to conclude that it was not in the best interests of
Wilmington Trust or its stockholders.
On September 24, 2010, Wilmington Trusts Board of
Directors met telephonically. Management presented its
preliminary estimates of Wilmington Trusts results for the
2010 third quarter, including the estimated loan loss provision,
charge-offs, and net loss for the quarter, as well as the amount
of the tax valuation allowance required to be established for
the quarter, which in the aggregate would reduce Wilmington
Trusts tangible book value by approximately 50%.
Management indicated that the potential impact of further credit
ratings downgrades
and/or
potential stock market reaction to third quarter results would
be detrimental to Wilmington Trusts businesses, and
summarized the manner in which Wilmington Trusts capital
ratios would be affected by this estimated quarterly loss. Given
the magnitude of expected losses for the third quarter, the
Board of Directors discussed the confluence of negative
pressures on Wilmington Trust, which included the required
submission by Wilmington Trusts bank subsidiaries to their
regulators on October 30 of call reports that would disclose
significant third-quarter losses by Wilmington Trusts bank
subsidiaries, the expected public availability of such call
reports on November 1, and the expectation of significant
regulatory action in the near term, which would likely result in
a significant diminution of Wilmington Trusts business
prospects. Such actions could include
cease-and-desist
orders, prompt corrective action directives, and other
regulatory enforcement actions. Any of these formal enforcement
actions could limit Wilmington Trusts ability to develop
new business or operate its existing businesses, or require it
to raise additional capital or dispose of certain assets within
a specified time period, or both. It became clear to Wilmington
Trusts Board of Directors and management that, if
Wilmington Trust did not enter into a strategic transaction
suitable to its regulators on or before the release of its third
quarter results and the public availability of its call reports,
it would likely suffer a material decline in the value of its
common stock, a decline in its credit ratings, a significant
loss of clients, the potential termination of business
relationships tied to Wilmington Trusts credit rating and
capital ratios, and significant regulatory actions.
27
Wilmington Trusts Board of Directors continued its meeting
with an update from management as to the status of the loan
portfolio review being performed by the third-party consultant.
Mr. Foley also summarized his meeting the prior day with
Party A to discuss the status of Party As interest in an
investment in Wilmington Trust.
Wilmington Trusts Board of Directors authorized management
to proceed with discussions with Party A and to prepare to
pursue the possibility of a transaction with other potential
bidders upon the expiration of the exclusivity period with Party
A. Management and Wilmington Trusts legal advisor began
preparing for expanded access to electronic data with Wilmington
Trusts confidential information to be shared with
potential parties, in addition to Party A, interested in
evaluating strategic alternatives with Wilmington Trust.
Management directed Skadden Arps to prepare appropriate
confidentiality agreements to be entered into with other
prospective interested parties.
Party A continued with its due diligence in late September and
early October and conducted numerous meetings with Wilmington
Trusts management to discuss its businesses and financial
condition.
In a telephonic meeting of Wilmington Trusts Board of
Directors on September 27, 2010, Lazard presented the names
of certain financial institutions that Lazard believed might be
interested in pursuing a transaction with Wilmington Trust.
Lazard noted that, in recommending which third parties should
first be contacted with respect to a potential transaction,
Lazard considered whether such third parties had
(1) strategic interest and the ability to pay,
(2) sufficient capitalization to consummate a transaction
and absorb credit losses, (3) the ability to move quickly
and dedicate substantial resources to a transaction,
(4) the ability to assume management of Wilmington
Trusts risk controls and loan portfolio, and (5) the
ability to meet requirements for regulatory approvals.
Wilmington Trusts Board of Directors, management and
financial and legal advisors discussed the advantages and
disadvantages of each of the potential counterparties.
Wilmington Trusts Board of Directors and management agreed
that in developing a strategy for outreach to potential
counterparties it was important to consider the limited time
available to secure a transaction, the detailed and
time-consuming due diligence process that a third party would
likely require, and the tremendous demands on management to
operate the business while responding to multiple inquires for
information and access from potential counterparties. Wilmington
Trusts Board of Directors, management and financial and
legal advisors discussed a schedule for contacting potential
bidders to begin the process of assessing third parties
interest in Wilmington Trust. Lazard suggested that certain
potential counterparties be contacted first and, if they did not
express interest in pursuing a transaction immediately,
additional identified financial institutions would be contacted
as authorized by Wilmington Trusts Board of Directors. On
September 28, Wilmington Trust engaged Lazard to act as
investment banker to Wilmington Trust in connection with a
review of strategic alternatives. Although Party A requested an
additional extension of its exclusivity period beyond
September 27, Wilmington Trusts Board of Directors
refused to grant that extension and authorized Lazard to begin
making contact with qualified third parties on
September 28, after the exclusivity period with Party A
expired.
At a telephonic meeting of Wilmington Trusts Board of
Directors on September 30, 2010, management presented an
update on the ongoing review of Wilmington Trusts loan
portfolio by the third-party consultant, and noted that
Wilmington Trusts loan loss provision for the third
quarter might exceed the level previously discussed based in
part on its own review and based in part on information provided
by the consultant. Lazard updated Wilmington Trusts Board
of Directors with respect to its discussions with potential
parties previously identified by Lazard as qualified to pursue a
potential transaction and then provided a summary of
Lazards interactions with Party A since the last board
meeting. Wilmington Trusts Board of Directors directed
Lazard to continue to pursue the possibility of a transaction
with other qualified third parties.
Wilmington Trust subsequently entered into confidentiality
agreements with three of the additional prospective parties,
which Lazard had contacted during the last week of September and
early October, including M&T, and these three parties began
extensive due diligence on Wilmington Trust.
On October 5, 2010, Party A submitted a preliminary
proposal to acquire a majority voting interest in Wilmington
Trust through the purchase of newly-issued convertible preferred
stock of Wilmington Trust in exchange for a cash payment, which
would be used in part to repay the Series A Preferred Stock
in full. On October 6, 2010, Wilmington Trusts Board
of Directors met telephonically to discuss the actions taken and
the process followed by Lazard since the last Board meeting with
respect to Wilmington Trusts consideration of strategic
alternatives, including a summary of the preliminary proposal
received from Party A. Representatives
28
from Party A then joined the Board meeting and made a
presentation to Wilmington Trusts Board of Directors
outlining the terms of Party As preliminary proposal.
After Party As representatives left the telephonic
meeting, Wilmington Trusts Board of Directors discussed a
number of issues related to Party As proposal, including
the effect of the proposal on Wilmington Trusts existing
common stockholders, who would become minority common
stockholders if Party A were to acquire a majority interest in
Wilmington Trust.
Representatives from Lazard updated Wilmington Trusts
Board of Directors with respect to responses received from other
potential counterparties that had been contacted by Lazard.
Wilmington Trusts Board of Directors directed Lazard to
contact additional qualified parties to determine their interest
in pursuing a transaction with Wilmington Trust. At that
meeting, Wilmington Trusts Board of Directors authorized
Lazard and Skadden Arps to further explore the proposal with
Party A in order for Wilmington Trusts Board of Directors
to more fully evaluate a potential transaction. Wilmington
Trusts Board of Directors and management discussed with
its financial and legal advisors the advisability of issuing
preferred stock to Party A and the possible advantages of a
transaction to acquire Wilmington Trust in its entirety.
Wilmington Trusts Board of Directors, management, and its
financial and legal advisors discussed whether any transaction
other than a one hundred percent acquisition by another party
would meet Wilmington Trusts requirements in light of the
preliminary estimates of third-quarter losses.
On October 7, 2010, representatives of Lazard and Skadden
Arps met with representatives of Party A and its legal and
financial advisors to discuss Party As preliminary
proposal in more detail. At this meeting, Party A provided
additional information about its preliminary proposal, including
its views on Wilmington Trusts loan portfolio. On
October 11, 2010, Party A submitted a term sheet outlining
in more detail the terms and conditions on which it would make
an investment in Wilmington Trust convertible preferred stock.
At telephonic meetings on October 14 and 15, 2010,
Wilmington Trusts Board of Directors and management
discussed Party As proposal and terms, with advice from
its financial and legal advisors. Party A proposed an investment
in the form of purchasing shares of newly-issued voting
convertible preferred stock of Wilmington Trust representing at
least 51% of the common stock of Wilmington Trust on an
as-converted basis, provided that such percentage ownership of
Party A would be subject to increase based upon the credit
performance of Wilmington Trusts loan portfolio. The
proposal included a number of provisions that would
significantly deter other bids and have adverse consequences on
the businesses and prospects of Wilmington Trust if the
transaction failed to close. Wilmington Trusts Board of
Directors discussed a number of issues relating to Party
As proposal, including that it contemplated ascribing a
significantly lower value to Wilmington Trusts commercial
loan portfolio. Wilmington Trusts Board of Directors
determined that a proposal for the entire company would likely
be more beneficial to stockholders than the terms of Party
As proposed investment. After extensive discussion of
Party As proposal, Wilmington Trusts Board of
Directors and management authorized Lazard to request a proposal
from Party A to acquire all of Wilmington Trusts
outstanding common stock rather than the majority investment
Party A initially proposed and which did not contain the
provisions that would deter other bids.
On October 18, 2010, Party A delivered a proposal to
acquire all of Wilmington Trusts outstanding shares for a
total of $269 million in the form of equity of Party A, to
be shared by Wilmington Trust common stockholders and the
U.S. Treasury, as the holder of the Series A Preferred
Stock, and the possibility of additional cash consideration to
be paid to Wilmington Trusts stockholders in the future,
contingent on future cash flows from Wilmington Trusts
real estate construction loan portfolio, to the extent that loan
portfolio generated returns above the value of such portfolio to
be established by Party A.
Following receipt of Party As
October 18th proposal, management initiated further
discussions with Party B to determine whether Party B would be
interested in purchasing the portion of Wilmington Trusts
commercial loan portfolio that it had previously discussed in an
all cash up-front transaction at a value that would exceed the
valuation for such portion of the loan portfolio to be
established by Party A following its proposed write-downs. Party
B, however, was unable to make a proposal on such terms.
On October 19, 2010, in a telephonic meeting, Wilmington
Trusts Board of Directors and management, with the
assistance of its financial and legal advisors, reviewed the
terms of this proposal, including the structure and likely value
of the contingent consideration, Party As proposed
significantly lower valuations of Wilmington Trusts loan
portfolio, and the likelihood of obtaining approval of the
proposed transaction by Wilmington Trusts stockholders and
the U.S. Treasury. Wilmington Trusts Board of
Directors determined that Lazard and
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management should seek an increase in the value of the
consideration to be provided to Wilmington Trusts
stockholders from Party A. In addition, Wilmington Trusts
Board of Directors instructed Lazard to encourage other
interested parties to provide proposals for a transaction with
Wilmington Trust promptly.
On October 19, 2010, Wilmington Trusts regulators
directed it not to pay dividends on its common stock for the
2010 third quarter.
Between October 19 and October 24, 2010, Wilmington
Trust continued to provide substantial due diligence materials
to interested parties and continued to request proposals for an
acquisition of Wilmington Trust in its entirety. On
October 19, 2010, one party conducting due diligence
contacted Lazard to indicate that it had terminated its interest
in Wilmington Trust because, based upon its preliminary
evaluation of Wilmington Trusts loan portfolio, it would
not be able to propose a transaction which would provide any
consideration to Wilmington Trusts common stockholders.
During this period, representatives of Lazard and management
continued to discuss the terms of the proposal with Party A and
its advisors, and sought to increase the value of the
consideration to be provided to Wilmington Trusts
stockholders.
On October 21, 2010, Wilmington Trusts Board of
Directors met in person to, among other things, review
Wilmington Trusts strategic alternatives. Lazard delivered
a presentation to Wilmington Trusts Board of Directors
regarding the process it had followed to date, including a
review of the potential counterparties that Lazard had contacted
and the status of each partys progress in considering a
transaction with Wilmington Trust. Wilmington Trusts Board
of Directors, together with management and Lazard, then
discussed the impact that Wilmington Trusts estimated
third quarter financial results could have on its Board of
Directors consideration of strategic alternatives. In
connection with the Board of Directors consideration of
strategic alternatives, representatives from Lazard described
recent transactions involving financial institutions that were
situated similarly to Wilmington Trust and noted that any
adverse regulatory action imposed on Wilmington Trust or its
subsidiaries would likely have a negative impact on Wilmington
Trusts ability to obtain value for its stockholders in a
transaction. Following the discussion of recent transactions and
Wilmington Trusts expected third quarter financial
results, representatives of Lazard updated Wilmington
Trusts Board of Directors regarding the ongoing
discussions with Party A, including a summary of the discussions
that had taken place since October 18, 2010. Lazard updated
Wilmington Trusts Board of Directors on its discussions
with Party A regarding the treatment of Wilmington Trusts
Series A Preferred Stock and the related warrant issued to
the U.S. Treasury, and ways that Party A could improve its
proposal to make it more favorable to Wilmington Trusts
stockholders. Lazard reviewed recent business combinations
involving other financial institutions with outstanding TARP
obligations, and presented the historic price performance and
current market valuation of Party As common securities, as
well as associated analyst price targets and recommendations.
Wilmington Trusts Board of Directors and management, with
advice from its financial and legal advisors, discussed the
process for considering strategic alternatives, including the
manner in which to approach the U.S. Treasury with respect
to the proposed treatment of Wilmington Trusts
Series A Preferred Stock.
On October 22, 2010, Party As counsel provided a
summary of the terms and conditions of Party As proposed
acquisition of Wilmington Trust, which continued to include a
number of provisions that would significantly deter other bids
and have adverse consequences on the businesses and prospects of
Wilmington Trust if the transaction failed to close. On
October 25, 2010, Party A provided a revised transaction
proposal for Wilmington Trust, which provided consideration to
holders of Wilmington Trust common stock of $2.00 per share in
equity of Party A, payment to the U.S. Treasury of
$165 million in equity of Party A (50% of the value of the
aggregate liquidation preference of its Series A Preferred
Stock), and a contingent value security which was based on the
receipt of cash flows from Wilmington Trusts construction
loan portfolio in excess of Party As valuation of that
portfolio, to be shared by Wilmington Trusts common
stockholders and the U.S. Treasury, as holder of the
Series A Preferred Stock.
On October 25, 2010, at the direction of Wilmington Trust,
Skadden Arps distributed a draft merger agreement to Party A and
Wachtell, Lipton, Rosen & Katz, special counsel to
M&T. Party A and M&T were the only two parties that
had continued to express interest in entering into a merger
transaction with Wilmington Trust in an appropriate timeframe.
On October 25, 2010, Wilmington Trusts Board of
Directors met telephonically to receive an update on the process
and discuss Party As latest proposal for Wilmington Trust.
Wilmington Trusts Board of Directors, with advice from its
financial and legal advisors, discussed Party As proposal
and the need to discuss the offer with the
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U.S. Treasury. Representatives from Lazard described the
status of other parties consideration of a proposed
transaction, indicating that Lazard expected to receive a
proposal from M&T in the near term and that another party
had withdrawn, indicating that it was not able to evaluate a
transaction with Wilmington Trust in the time available. On the
same day, management and Lazard engaged in discussions with
representatives of Wilmington Trusts primary regulators to
discuss the process being undertaken by Wilmington Trusts
Board of Directors regarding a potential transaction. On
October 26, 2010, management, Party A, and their respective
advisors held a teleconference with representatives of the
U.S. Treasury to review the proposed treatment of
Wilmington Trusts Series A Preferred Stock pursuant
to Party As proposal. Party A requested guidance as to
whether the U.S. Treasury would accept, in exchange for its
Series A Preferred Stock, Party As publicly traded
equity securities with a value significantly less than the
liquidation value of the preferred stock, plus the possibility
of additional cash consideration to be paid in the future,
contingent on future cash flows from Wilmington Trusts
real estate construction loan portfolio, to the extent that loan
portfolio generated returns above the value of such portfolio to
be established by Party A. Representatives of the
U.S. Treasury indicated that they would not accept an
amount less than the liquidation value of Wilmington
Trusts Series A Preferred Stock in connection with
the proposed transaction.
At the close of business on October 26, 2010, counsel to
Party A submitted a draft merger agreement in lieu of the draft
prepared by Skadden Arps. Management, Skadden Arps, and Lazard
discussed Party As continued insistence on a number of
closing conditions that presented a significant risk to the
likelihood of consummating a transaction, and continued
inclusion of a number of provisions that would significantly
deter other bids and have adverse consequences on the businesses
and prospects of Wilmington Trust if the transaction failed to
close.
Following those discussions, on October 27, 2010,
Wilmington Trusts Board of Directors convened a meeting
and discussed Wilmington Trusts consideration of strategic
alternatives. Lazard described the process to date, including a
review of the potential counterparties that Lazard contacted or
with which it had entered into discussions and the status of
each partys progress in considering a transaction with
Wilmington Trust. Lazard told Wilmington Trusts Board of
Directors that it had contacted or engaged in discussions with
ten financial institutions. Following an initial review, five
parties had declined to participate in a potential transaction
with Wilmington Trust. Five parties executed confidentiality
agreements, four of which, including Party A and M&T,
conducted extensive due diligence. Two parties had withdrawn,
and only the two remaining parties, Party A and M&T, made
proposals to acquire Wilmington Trust. Representatives from
Lazard discussed the impact that Wilmington Trusts
estimated third quarter financial results could have on its
stock price, ratings and business prospects, and described
recent transactions involving financial institutions that were
situated similarly to Wilmington Trust. Wilmingtons Board
of Directors and management, with advice from its financial and
legal advisors, discussed the highly conditional nature of Party
As proposal, including the significant portion of deferred
contingent consideration, and the need to obtain agreement of
the U.S. Treasury for such a transaction.
On October 27, 2010, M&T submitted to Lazard a
preliminary proposal to acquire Wilmington Trust for a price
equal to its tangible book value per share at September 30,
2010, payable in M&T common stock, and the assumption by
M&T of the Series A Preferred Stock issued to the
U.S. Treasury and all related obligations.
On October 28, 2010, Wilmington Trust engaged Morgan
Stanley to render an additional opinion as to the fairness of
the proposed M&T transaction. On the same date, Wachtell,
Lipton, special counsel for M&T, submitted a revised merger
agreement based on the draft prepared and circulated by Skadden
Arps. Later that day, Lazard requested Party A to submit its
best and final offer.
The following day, Party A submitted a revised proposal which
included repayment of the full value of Wilmington Trusts
Series A Preferred Stock issued to the U.S. Treasury
in equity securities of Party A, consideration to holders of
Wilmington Trust common stock of $0.50 per share in equity of
Party A and a contingent value security, with payments in the
future based on the receipt of cash flows from Wilmington
Trusts construction loan portfolio in excess of Party
As valuation of that portfolio. On October 29 and 30,
2010, Wilmington Trusts Board of Directors and management
met telephonically with its financial and legal advisors to
consider Party As revised proposal and the terms of the
proposal offered by M&T. From October 29 through
October 31, Skadden Arps continued to negotiate the terms
of the merger agreement and related documents with Wachtell,
Lipton, and engaged in limited discussions with representatives
of Party A with respect to its proposals.
On October 31, 2010, Party A amended its proposal to
provide Wilmington Trusts common stockholders with $1.20
per share in equity securities of Party A and a contingent value
security with a proportionately lower value.
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The proposal also provided that the consideration to be issued
to the U.S. Treasury in respect of the Series A
Preferred Stock would be a mix of 80% equity securities of Party
A and 20% contingent value securities.
On October 31, 2010, Wilmington Trusts Board of
Directors held a special in-person meeting. Representatives of
Lazard provided an overview of events since the previous meeting
of Wilmington Trusts Board of Directors, including a
summary of discussions with M&T and Party A, the terms of
the M&T proposal, and the latest proposal from Party A.
Representatives of Skadden Arps presented a summary of the
merger agreement proposed to be entered into with M&T.
Lazard then presented an analysis of the financial terms of the
M&T proposal, including the transaction value and form of
consideration as well as the historical performance of
M&Ts stock and the potential effects of the proposed
merger. For a summary of Lazards presentation, see
Opinions of Wilmington Trusts Financial
Advisors, beginning on Page 37 of this proxy
statement/prospectus.
Representatives of Lazard and Morgan Stanley delivered their
respective oral opinions to Wilmington Trusts Board of
Directors, and subsequently each confirmed in writing, that as
of that date and based upon and subject to the assumptions,
procedures, factors, qualifications and limitations stated in
their respective opinions the exchange ratio to be received in
respect of each share of Wilmington Trust common stock in the
transaction with M&T was fair to Wilmington Trusts
common stockholders from a financial point of view.
Wilmington Trusts Board of Directors discussed the effects
Wilmington Trust and its businesses likely would suffer if
Wilmington Trust did not enter into a strategic transaction on
or before the release of its third quarter results and the
public availability of its call reports, including the
likelihood of a material decline in the value of its common
stock, a reduction in its credit ratings, a significant loss of
clients, the potential termination of business relationships
that are tied to Wilmington Trusts credit ratings and
capital ratios, and significant regulatory actions.
Following these discussions, and extensive review and discussion
among Wilmington Trusts directors, including consideration
of the factors described under Wilmington
Trusts Reasons for the Merger; Recommendation of
Wilmington Trusts Board of Directors, beginning on
Page 34 of this proxy statement/prospectus, and
consideration of the above referenced presentation and the
fairness opinions of Lazard and Morgan Stanley, Wilmington
Trusts Board of Directors unanimously approved the
M&T merger agreement and the transactions contemplated
thereby, and declared the merger and other transactions
contemplated by the merger agreement to be advisable. Wilmington
Trusts Board of Directors then directed management and
Wilmington Trusts advisors to finalize and execute a
definitive merger agreement on the terms reviewed at the Board
meeting. Late in the evening on October 31, 2010, the
parties executed the merger agreement.
The transaction was announced prior to the opening of the
financial markets in New York City on November 1, 2010. On
that date, Wilmington Trust released its third quarter financial
results in which it reported a pre-tax loss of
$264.6 million for the quarter, which included a loan loss
provision of $281.5 million. Continued losses and
uncertainty regarding how credit problems could affect future
financial performance also led management to conclude that it
was no longer more likely than not that a portion of its
deferred tax asset would be realized. This conclusion led
Wilmington Trust to establish a $189.5 million valuation
allowance against the deferred tax asset. This valuation
allowance increased tax expense and increased the after-tax net
loss for the third quarter of 2010 to $365.3 million.
The third-quarter losses had a significant impact on capital
ratios, book value, and tangible book value. All regulatory
capital ratios remained above the levels for Wilmington Trust to
be considered well capitalized, but declined by 3% or more. The
tangible common equity ratio, a ratio used by financial industry
and rating agencies, fell to 3.51%, well below historic levels.
The tangible book value of Wilmington Trust fell by 54%, to
$3.84 per share.
In early December 2010, Wilmington Trust received a letter
setting forth a non-binding proposal from Party C, which had not
previously engaged in any discussions with Wilmington Trust or
its representatives with respect to a potential acquisition of
Wilmington Trust. Based on publicly available information, Party
C was a recently formed entity with no prior operating history
as a bank or financial institution and had not publicly
announced or completed any acquisition of such a company. The
proposal contemplated that Party C would invest
$800 million into Wilmington Trust in return for newly
issued shares of Wilmington Trust common stock at a valuation of
$4.50 per share. The letter further provided that, six months
after the investment, Party C would commence a tender offer to
purchase, under certain circumstances not identified in the
proposal, approximately 44.4 million shares of
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Wilmington Trusts outstanding common stock, representing
less than half of the currently outstanding shares of Wilmington
Trust common stock, at a price of $4.50 per share in cash. The
proposal also contemplated the redemption of Wilmington
Trusts outstanding Series A Preferred Stock. Party C
stated that its proposal was conditioned on confirmatory due
diligence of Wilmington Trust.
Under this proposal, after the initial investment, existing
stockholders of Wilmington Trust would remain holders of
approximately 48% of the pro forma outstanding common shares.
Assuming Party C completed the subsequent tender offer described
in its letter, existing stockholders would continue to hold
approximately 25% of Wilmington Trusts pro forma
outstanding common shares.
On December 13, 2010, Wilmington Trusts Board of
Directors met telephonically with management and its financial
and legal advisors to consider Party Cs proposal.
Representatives of Lazard presented an analysis of the financial
terms of Party Cs proposal, the proposed transaction
structure, information with respect to Party C and the effects
of Party Cs proposed transaction on dilution to Wilmington
Trusts existing stockholders and on Wilmington
Trusts tangible book value. Representatives of Skadden
Arps discussed the directors fiduciary duties and
Wilmington Trusts obligations under the M&T merger
agreement relating to its receipt of an alternative transaction
proposal, as defined under the merger agreement.
Wilmington Trusts Board of Directors considered a number
of factors with respect to Party Cs proposal including:
(1) the per share value of the proposal to existing
stockholders of Wilmington Trust, who would continue as minority
stockholders following the transactions contemplated by Party C,
(2) the lack of available information about Party C,
(3) that Party Cs proposal was to acquire less than
the entire company and did not address, and left significant
uncertainty with respect to, the rights of the remaining
Wilmington Trust stockholders following the proposed
transaction, (4) that Party C was a recently-formed entity,
with no evident operating history as a bank or financial
institution, (5) that there was no assurance that
Wilmington Trusts loan portfolio would stabilize or
strengthen significantly in the near term or that its capital
position would not erode further, which could substantially
affect the value of Wilmington Trusts common stock
following the transactions contemplated by Party C, (6) the
risk of downgrades by credit rating agencies and the negative
effect such downgrades could have on Wilmington Trusts
businesses, which would substantially affect current
stockholders of Wilmington Trust following the transactions
contemplated by Party C or if those transactions were not
completed as described, (7) the risks entailed in Party
Cs requirement for confirmatory due diligence,
(8) whether Party C had the ability to meet the
requirements for regulatory approvals for the proposed
transaction, including the ability to assume management of
Wilmington Trusts risk controls and loan portfolios in a
manner that would be satisfactory to Wilmington Trusts
regulators, and (9) the possible timing of any transaction
with Party C in light of the provisions of the merger agreement
relating to alternative transaction proposals. In addition to
considering the above factors, Wilmington Trusts Board of
Directors considered that, based on publicly available
information, Party C reportedly had approximately
$1.1 billion in capital available, which did not appear to
be sufficient to permit it to absorb significant additional
losses that may be incurred by Wilmington Trust.
Following a thorough discussion, Wilmington Trusts Board
of Directors determined that Party Cs proposal was not,
and was not reasonably likely to result in, a Superior Proposal
as defined in the merger agreement. On December 14, 2010,
Wilmington Trust sent a letter to Party C setting forth its
determination.
Later in December, 2010, Wilmington Trust received a letter from
Party C stating that Party C would now be willing to acquire all
outstanding Wilmington Trust common shares for $4.50 per share
in cash. The letter did not specify the structure of the
proposed transaction, the proposed timing to completion, or any
other terms or conditions relating to Party Cs proposal.
On January 5, 2011, Wilmington Trusts Board of
Directors met telephonically with management and its financial
and legal advisors to consider Party Cs revised proposal.
Representatives of Skadden Arps reviewed with the Board of
Directors Wilmington Trusts obligations under the merger
agreement relating to its receipt of an alternative transaction
proposal. Wilmington Trusts Board of Directors considered
a number of factors with respect to Party Cs revised
proposal including: (1) the $4.50 per share offered by
Party C relative to the consideration to be received pursuant to
the merger agreement, which, based on M&Ts most
recently available closing price, was valued at approximately
$4.47 per share, had been valued at more than $4.50 per share
based on recent trading levels, and had increased substantially
from the levels prevailing at the time the merger agreement was
signed,
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(2) whether Party C was likely to have sufficient capital
to acquire Wilmington Trust and absorb significant additional
losses that may be incurred by Wilmington Trust, (3) the
risks presented by Party Cs requirement of confirmatory
due diligence as a condition to entering into any binding
agreement, (4) the risks inherent in Party Cs status
as a newly-formed company without any banking operations,
including whether Party C was likely to be able to meet the
requirements for regulatory approvals for the proposed
transaction, including the ability to assume management of
Wilmington Trusts businesses, risk controls and loan
portfolios in a manner that would be satisfactory to Wilmington
Trusts regulators, and (5) the possible timing of any
transaction with Party C in light of the provisions of the
merger agreement relating to alternative transaction proposals.
Following a thorough discussion, based on the above factors,
Wilmington Trusts Board of Directors determined that Party
Cs revised proposal was not, and was not reasonably likely
to result in, a Superior Proposal.
Wilmington
Trusts Reasons for the Merger; Recommendation of
Wilmington Trusts Board of Directors
By unanimous vote after careful consideration, Wilmington
Trusts Board of Directors determined that the merger is
advisable and approved and adopted the merger agreement and the
transactions contemplated by the merger agreement, including the
merger. Accordingly, Wilmington Trusts Board of
Directors unanimously recommends that Wilmington Trust
stockholders vote FOR adoption of the merger
agreement.
In concluding that the merger is advisable and recommending that
Wilmington Trusts stockholders adopt the merger agreement,
Wilmington Trusts Board of Directors considered numerous
factors, including, among others, the following factors that
supported the decision to approve the merger:
Credit
Deterioration and Prospects for Wilmington Trust
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The credit deterioration in Wilmington Trusts loan
portfolio, particularly in real estate construction loans, which
deterioration resulted in a loan loss provision of
$77.4 million in the first quarter of 2010,
$205.2 million in the second quarter of 2010, and
$281.5 million in the third quarter of 2010.
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The significant decrease in Wilmington Trusts capital
ratios caused by its net loss during the first nine months of
2010.
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Continuing decline of real estate values in Sussex and Kent
Counties in Delaware and the concentration of Wilmington
Trusts commercial loan portfolio in these Counties.
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Managements belief that there was no significant economic
or real estate recovery on the horizon in these markets and,
therefore, that there was no assurance that its loan portfolio
would stabilize or strengthen significantly in the near term or
that its capital position would not erode further.
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The increased risk, as a result of such credit deterioration and
economic outlook, of downgrades by credit rating agencies and
the negative effect such downgrades could have on Wilmington
Trusts businesses, particularly its Corporate Client
Services business.
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Managements belief that, without a strategic transaction
acceptable to its regulators, Wilmington Trust would likely face
significant regulatory actions in the near term, which would
likely result in a significant impairment of its business
prospects.
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The need to ensure that Wilmington Trusts two fee-based
businesses Wealth Advisory Services and Corporate
Client Services did not suffer significant
deterioration as a result of the factors set forth above.
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Wilmington Trusts Board of Directors belief that a
strategic transaction with a financially strong party could
provide Wilmington Trust with an opportunity to resolve most of
the issues confronting Wilmington Trust.
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Best
Alternative Currently Available
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The careful study of the strategic options available to
Wilmington Trust undertaken by its Board of Directors and
management, with the assistance of its financial and legal
advisors, after considering numerous factors,
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including those set forth above, and their review of other
strategic alternatives, including without limitation, the
proposed loan sale to Party B.
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Wilmington Trust, with the assistance of its financial advisor,
Lazard, solicited and engaged in discussions with ten financial
institutions, entered into confidentiality agreements with five
parties, four of which conducted due diligence and two of which,
Party A and M&T, submitted proposals.
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Wilmington Trusts need to enter into a transaction with a
financially strong party, able to absorb credit losses, improve
risk practices and controls, asset quality, compliance and audit
issues, and with a high likelihood of receiving regulatory
approval, and the capability of executing a transaction in the
near term.
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The terms of Wilmington Trusts Series A Preferred
Stock held by the U.S. Treasury relating to a business
combination.
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The need to obtain approval of Wilmington Trusts
stockholders to any proposed transaction.
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The advice from Lazard, as the financial advisor to Wilmington
Trust, and Skadden Arps, as its special legal counsel, in
comparing the merger with M&T to other strategic
alternatives available.
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Advantages
of the M&T Merger
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M&Ts superior earnings and credit performance across
economic cycles, which would make it a strong and stable partner
for Wilmington Trust.
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The likelihood that the merger would receive the necessary
regulatory approvals in a timely fashion.
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The strength of M&Ts commercial and consumer banking
businesses in the Northeast region that uniquely complement
Wilmington Trusts regional banking in the mid-Atlantic
area and its global wealth management and corporate client
services businesses.
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The fact that the merger provides for the assumption by M&T
of all of Wilmington Trusts obligations under the terms of
its Series A Preferred Stock held by the U.S. Treasury.
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Form
and Value of Consideration
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The all stock and fixed-exchange ratio aspects of
the merger consideration, which will allow Wilmington Trust
common stockholders to participate in the future performance of
the combined Wilmington Trust and M&T businesses and the
value to Wilmington Trust stockholders represented by that
consideration.
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The adequacy of the merger consideration, not only in relation
to the current tangible book value per share of Wilmington
Trusts common stock, but also in relation to the potential
negative impacts to the value of Wilmington Trusts common
stock that any adverse regulatory action or downgrade by credit
ratings agencies could have on its stock price and future
prospects.
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The historical and current market price of M&Ts
common stock and its dividend track record, which could provide
Wilmington Trusts stockholders with the ability to realize
increased value following the merger.
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The fact that the merger generally will be treated as a taxable
transaction to holders of Wilmington Trust common stock, who
will be able to recognize any losses realized upon the receipt
of M&T common stock in exchange for their Wilmington Trust
common stock pursuant to the merger. Such losses generally will
be characterized as capital losses.
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Terms
and Conditions of Merger Agreement
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The terms and conditions of the merger agreement, including the
parties respective representations and warranties,
covenants, conditions to closing, and termination provisions,
which Wilmington Trusts Board of Directors believed
provided reasonable assurances as to M&Ts obligation
and ability to consummate the merger in a timely manner, without
any extraordinary conditions.
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The merger agreement provided, among other things, reasonable
certainty as to the ability of the parties to complete the
merger, favorable treatment of the Series A Preferred
Stock, the likelihood of obtaining a favorable view of the
transaction by regulators, and an opportunity for Wilmington
Trust, under certain circumstances, to enter into discussions
with third parties in the event such party(ies) make an
unsolicited competing proposal.
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Fairness
Opinions and Analysis
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The respective opinions of Lazard and Morgan Stanley described
under the heading Opinions of Wilmington
Trusts Financial Advisors. A copy of each of the
Lazard and Morgan Stanley opinions is attached as Annex B
and Annex C, respectively, to this proxy
statement/prospectus.
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In addition, Wilmington Trusts Board of Directors
considered the following potentially countervailing factors in
connection with its decision to approve and declare advisable
the merger agreement (which it determined did not outweigh the
expected benefits of entering into the merger agreement):
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The exchange ratio represented a value, as of the last trading
day prior to execution of the merger agreement, and prior to the
release of Wilmington Trusts third-quarter earnings, that
was below the market price for Wilmington Trust common stock on
that day and the historic trading price of Wilmington
Trusts common stock.
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The restrictions on the operation of Wilmington Trusts
businesses during the period between signing of the merger
agreement and completion of the merger, customary for public
company merger agreements involving financial institutions.
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Certain covenants in the merger agreement, including provisions
relating to payment of the termination fee upon certain events,
limitations on Wilmington Trusts ability to solicit or
discuss alternative transactions during the pendency of the
merger, and the requirement that Wilmington Trust must convene a
special meeting of common stockholders to vote on adoption of
the merger agreement regardless of whether Wilmington
Trusts Board of Directors changes its recommendation to
stockholders in connection with the merger agreement, which
provisions could operate to limit Wilmington Trusts
ability to pursue or enter into alternative transaction
proposals if they were to arise prior to the vote of Wilmington
Trusts common stockholders to adopt the merger agreement.
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The risks and costs associated with the merger not being
completed in a timely manner, or at all, including as a result
of any failure to obtain required regulatory approvals, such as
the risks and costs relating to diversion of management and
employee attention, potential employee attrition, and the
potential effect on business and customer relationships.
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Given all of the factors discussed above and in particular
including the factors noted under the headings
Credit Deterioration and Prospects for
Wilmington Trust and Best Alternative
Currently Available, Wilmington Trust had a limited period
of time to solicit interest of third parties and it could not be
ruled out that more available time might have resulted in the
development of additional alternatives.
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The reasons set forth above are not intended to be exhaustive,
but include the material considerations of Wilmington
Trusts Board of Directors in approving the merger
agreement. Although each member of Wilmington Trusts Board
of Directors individually considered these and other factors,
Wilmington Trusts Board of Directors did not collectively
assign any specific or relative weights to the factors
considered and did not make any determination with respect to
any individual factor. Wilmington Trusts Board of
Directors collectively made its determination with respect to
the merger based on the conclusion of its directors, in light of
the factors that each of them considered appropriate, that the
merger is advisable.
It should be noted that this explanation of the reasoning of
Wilmington Trusts Board of Directors and other information
presented in this section is forward-looking in nature and,
therefore, should be read in light of the factors discussed
under the heading Forward Looking Statements.
After considering, among other things, the matters discussed
above and the opinions of Lazard and Morgan Stanley referred to
above, Wilmington Trusts Board of Directors believed that
the merger was advisable and,
36
therefore, unanimously approved and adopted the merger
agreement. Wilmington Trusts Board of Directors
unanimously recommends that the Wilmington Trust stockholders
vote FOR adoption of the merger agreement.
Opinions
of Wilmington Trusts Financial Advisors
Opinion
of Lazard Frères & Co. LLC
In connection with the merger, on October 31, 2010, Lazard
Frères & Co. LLC, or Lazard, rendered its oral
opinion, subsequently confirmed in writing to Wilmington
Trusts Board of Directors, that, as of such date, and
based upon and subject to the assumptions, procedures, factors
qualifications and limitations set forth therein, the exchange
ratio was fair, from a financial point of view, to holders of
Wilmington Trusts common stock.
The full text of Lazards opinion, dated
October 31, 2010, which sets forth the assumptions made,
procedures followed, factors considered and qualifications and
limitations on the review undertaken by Lazard in connection
with its opinion, is attached to this proxy statement/prospectus
as Annex B and is incorporated into this proxy
statement/prospectus by reference. We encourage you to read
Lazards opinion and this section carefully and in their
entirety.
Lazards opinion was directed to Wilmington Trusts
Board of Directors for the information and assistance of
Wilmington Trusts Board of Directors in connection with
its evaluation of the merger and addressed only the fairness as
of the date of the opinion, from a financial point of view, of
the exchange ratio to the holders of Wilmington Trusts
common stock. Lazards opinion was not intended to and does
not constitute a recommendation to any stockholder as to how
such stockholder should vote or act with respect to the merger
or any matter relating thereto. Lazards opinion was
necessarily based on economic, monetary, market and other
conditions as in effect on, and the information made available
to Lazard as of, the date of the opinion. Lazard assumed no
responsibility for updating or revising its opinion based on
circumstances or events occurring after the date of the opinion.
Lazard did not express any opinion as to the prices at which
shares of Wilmington Trust common stock or M&T common stock
may trade at any time subsequent to the announcement of the
merger.
In connection with its opinion, Lazard:
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reviewed the financial terms and conditions of a draft, dated
October 31, 2010, of the merger agreement;
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analyzed certain publicly available historical business and
financial information relating to Wilmington Trust and M&T,
respectively;
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reviewed various financial forecasts and other data provided to
Lazard by Wilmington Trust relating to the business of
Wilmington Trust;
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held discussions with members of the senior managements of
Wilmington Trust and M&T with respect to the businesses and
prospects of Wilmington Trust and M&T, respectively;
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reviewed public information with respect to certain other
financial institutions that Lazard believed to be generally
relevant in evaluating the merger;
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reviewed the financial terms of certain business combinations
involving financial institutions that Lazard believed to be
generally relevant in evaluating the merger, including
transactions involving distressed financial institutions;
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reviewed historical stock prices and trading volumes of
Wilmington Trust common stock and M&T common stock; and
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conducted such other financial studies, analyses and
investigations as Lazard deemed appropriate.
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Lazard assumed and relied upon the accuracy and completeness of
the foregoing information, without independent verification of
such information. However, Lazard was unable to rely on, and
therefore, with the consent of Wilmington Trusts Board of
Directors, Lazard did not use in its analysis the financial
forecasts and related data provided to it by Wilmington Trust,
which did not reflect or take into account the potential
imminent
37
significant regulatory actions and credit rating downgrades
Wilmington Trust could face at the time the opinion was given.
Lazard did not perform certain analyses (such as a discounted
cash flow analysis or a dividend discount analysis) that it
would customarily prepare in connection with the delivery of its
fairness opinion because such analyses would not have been
meaningful as a result of Wilmington Trusts extraordinary
circumstances at the time the opinion was given.
Lazard did not conduct any independent valuation or appraisal of
any of the assets or liabilities (contingent or otherwise) of
Wilmington Trust or M&T or concerning the solvency or fair
value of Wilmington Trust or M&T, and Lazard was not
furnished with such valuation or appraisal. Lazard is not an
expert in the evaluation of loan portfolios for the purposes of
assessing the adequacy of allowances for losses with respect
thereto, and Lazard did not make an independent evaluation of
the adequacy of such allowances by Wilmington Trust or M&T.
In addition, Lazard did not review individual credit files nor
did Lazard conduct any independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of
Wilmington Trust or M&T or any of their respective
subsidiaries, nor did Lazard make any physical inspection of the
properties or assets of Wilmington Trust or M&T.
In connection with Lazards opinion, Wilmington
Trusts management informed Lazard that (i) Wilmington
Trust had considerable exposure to risks related to its loan
portfolio and the related assets of Wilmington Trust and its
subsidiaries and (ii) the business and prospects of
Wilmington Trust were and would continue to be severely and
negatively affected as a result thereof, including its ability
to operate on a stand-alone basis.
In particular, Wilmington Trust informed Lazard that:
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Based on discussions Wilmington Trust had with United States
banking regulators, Wilmington Trust believed that, without a
change of control transaction pursuant to which another
financial institution acceptable to such regulators acquired
Wilmington Trust, Wilmington Trust would likely face imminent
significant regulatory actions, which actions would result in
Wilmington Trusts business prospects likely worsening
dramatically.
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Wilmington Trust would incur a significant charge during the
quarter ending September 30, 2010, which charge (together
with other results of operations) would reduce Wilmington
Trusts tangible book value per share of Wilmington Trust
common stock by approximately 50% (and in connection therewith
Wilmington Trust provided and Lazard reviewed certain
preliminary financial information relating to Wilmington Trust
for the quarter ending September 30, 2010).
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United States banking regulators had recently issued a letter to
Wilmington Trust prohibiting Wilmington Trust from paying
dividends on Wilmington Trust common stock.
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As a result of the foregoing, Wilmington Trust was faced with a
narrowing set of alternatives. As part of Lazards
engagement, Lazard assisted Wilmington Trust in connection with
its evaluation of these alternatives, including a sale of
Wilmington Trust. Although Wilmington Trust and Lazard initiated
a process to identify potential acquirors and a variety of
potential acquirors were contacted, the sale process was
conducted over a one month period of time and without the
benefit of a more fulsome auction process, and the terms of the
merger agreement were negotiated and reviewed by Wilmington
Trust over a brief period of time.
In arriving at its opinion, Lazard took into account the
foregoing and Lazard considered recent instances where concerns
regarding the financial condition of, or imminent regulatory
action involving, a bank or financial institution triggered a
rapid deterioration of the institutions ability to
continue normal operations, and as a result of which the common
equity holders of the institution received substantially
diminished value, if any at all, for their equity.
In rendering its opinion, Lazard assumed, with the consent of
Wilmington Trust, that the merger would be consummated on the
terms described in the merger agreement, without any waiver or
modification of any material terms or conditions. Lazard also
assumed, with Wilmington Trusts consent, that obtaining
the necessary regulatory or third party approvals and consents
for the merger will not have an adverse effect on Wilmington
Trust, M&T or the combined company. Lazard did not express
any opinion as to any tax or other consequences that might
result from the merger, nor did its opinion address any legal,
tax, regulatory or accounting matters, as to which Lazard
understood that Wilmington Trust obtained such advice as it
deemed necessary from qualified professionals. Lazard expressed
no view or opinion as to any terms or other aspects of the
merger (other than the exchange ratio to the
38
extent expressly specified in the opinion), or any consideration
received in connection therewith by, the holders of any class of
securities, creditors, or other constituencies of Wilmington
Trust other than the holders of shares of Wilmington Trust
common stock. In addition, Lazard expressed no view or opinion
as to the fairness of the amount or nature of, or any other
aspects relating to, the compensation to any officers, directors
or employees of any parties to the merger, or class of such
persons, relative to the exchange ratio or otherwise.
In connection with Lazards services as financial advisor
to Wilmington Trust, Wilmington Trust agreed to pay Lazard a
fee, a portion of which has already been paid and a substantial
portion of which is contingent upon the closing of the merger or
certain other transactions. Wilmington Trust also agreed to
reimburse Lazard for certain expenses incurred in connection
with Lazards engagement and to indemnify Lazard and
certain related persons under certain circumstances against
certain liabilities that may arise from or related to
Lazards engagement, including certain liabilities under
U.S. federal securities laws.
Lazard Asset Management serves as a
sub-adviser
to Wilmington Trust Retirement and Institutional Services
Company, in its capacity as Trustee, for several collective
investment trusts, and receives a management fee based on a
percentage of the net asset value of each applicable collective
investment trust. In addition, in the ordinary course of their
respective businesses, Lazard Frères & Co. LLC
and LFCM Holdings LLC (an entity indirectly owned in large part
by managing directors of Lazard Frères & Co.
LLC) and their respective affiliates may actively trade and
hold securities of Wilmington Trust or the securities of
M&T and certain of their respective affiliates for their
own accounts and for the accounts of their customers and,
accordingly, may at any time hold a long or short position in
such securities, and may trade and hold securities on behalf of
Wilmington Trust, M&T and their respective affiliates. The
issuance of Lazards opinion was approved by the opinion
committee of Lazard.
The exchange ratio was determined through arms-length
negotiations between Wilmington Trust and M&T and was
approved by Wilmington Trusts Board of Directors. Lazard
provided advice to Wilmington Trust during these negotiations.
Lazard did not, however, recommend any specific exchange ratio
to Wilmington Trust or that any specific exchange ratio
constituted the only appropriate merger consideration for the
merger. The opinion of Lazard was only one of many factors taken
into consideration by Wilmington Trusts Board of Directors
in its evaluation of the merger. Consequently, the analyses
described below should not be viewed as determinative of the
views of Wilmington Trusts Board of Directors or
Wilmington Trusts management with respect to the merger or
exchange ratio.
In connection with rendering its opinion, Lazard performed
certain financial, comparative and other analyses that Lazard
deemed appropriate in connection with rendering its opinion as
summarized below under Summary of Joint
Financial Analyses. The summary of the analyses and
reviews described below under Summary of Joint
Financial Analyses is not a complete description of the
analyses and reviews underlying Lazards opinion. The
preparation of a fairness opinion is a complex process involving
various determinations as to the most appropriate and relevant
methods of financial analysis and review and the application of
those methods to particular circumstances, and, therefore, is
not readily susceptible to partial analysis or summary
description. Considering selected portions of these analyses and
reviews or the summary contained in Summary of
Joint Financial Analyses, without considering the analyses
and reviews as a whole, could create an incomplete or misleading
view of the analyses and reviews underlying Lazards
opinion. In arriving at its opinion, Lazard considered the
results of all of its analyses and reviews and did not attribute
any particular weight to any factor, analysis or review
considered by it; rather, Lazard made its determination as to
fairness on the basis of its experience and professional
judgment after considering the results of all of its analyses
and reviews.
For purposes of its analyses and reviews, Lazard considered
industry performance, general business, economic, market,
regulatory and financial conditions and other matters, many of
which are beyond the control of Wilmington Trust and M&T.
No company, business or transaction used in Lazards
analyses and reviews as a comparison is identical to Wilmington
Trust, M&T or the merger, and an evaluation of the results
of those analyses is not entirely mathematical. Rather, the
analyses and reviews involve complex considerations and
judgments concerning financial and operating characteristics and
other factors that could affect the acquisition, public trading
or other values of the companies, businesses or transactions
used in Lazards analyses and reviews. The estimates
contained in Lazards analyses and reviews and the ranges
of valuations resulting from any particular analysis or review
are not necessarily indicative of actual values or predictive of
future results or values, which may be
39
significantly more or less favorable than those suggested by
Lazards analyses and reviews. In addition, analyses
relating to the value of companies, businesses or securities do
not purport to be appraisals or to reflect the prices at which
companies, businesses or securities actually may be sold.
Accordingly, the estimates used in, and the results derived
from, Lazards analyses are inherently subject to
substantial uncertainty.
Opinion
of Morgan Stanley & Co. Incorporated
In connection with the merger, on October 31, 2010, Morgan
Stanley & Co. Incorporated, or Morgan Stanley,
rendered its oral opinion, subsequently confirmed in writing to
Wilmington Trusts Board of Directors, that, as of such
date, and based upon and subject to the assumptions, procedures,
factors, qualifications and limitations set forth therein, the
exchange ratio was fair, from a financial point of view, to the
holders of shares of Wilmington Trust common stock.
The full text of Morgan Stanleys opinion, dated
October 31, 2010, is attached as Annex C to this proxy
statement/prospectus. You should read the opinion in its
entirety for a discussion of the assumptions made, procedures
followed, factors considered and limitations upon the review
undertaken by Morgan Stanley in rendering its opinion. This
summary is qualified in its entirety by reference to the full
text of such opinion. Morgan Stanleys opinion is directed
to Wilmington Trusts Board of Directors, addresses only
the fairness of the exchange ratio from a financial point of
view to the holders of shares of Wilmington Trust common stock,
and does not address any other aspect of the merger or
constitute a recommendation as to how any stockholders of
Wilmington Trust should vote at any stockholders meeting
held in connection with the merger.
In connection with Morgan Stanleys opinion, Morgan Stanley
was informed by Wilmington Trust that (i) Wilmington Trust
had considerable exposure to risks related to its loan portfolio
and the related assets of Wilmington Trust and its subsidiaries;
(ii) the business and prospects of Wilmington Trust were
and would continue to be severely and negatively affected as a
result thereof, including its ability to operate on a standalone
basis; (iii) Wilmington Trust would incur a significant
charge during the quarter ending September 30, 2010, which
charge (together with other results of operations) would reduce
Wilmington Trusts tangible book value per share of
Wilmington Trust common stock by approximately 50% (and in
connection therewith Wilmington Trust provided and Morgan
Stanley reviewed certain preliminary financial information
relating to Wilmington Trust for the quarter ending
September 30, 2010); (iv) based on discussions
Wilmington Trust had with United States banking regulators,
Wilmington Trust believed that, without a change of control
transaction pursuant to which another financial institution
acceptable to such regulators acquired Wilmington Trust,
Wilmington Trust would face imminent significant regulatory
actions and, as a result, its business prospects would likely
worsen dramatically; and (v) United States banking
regulators had recently issued a letter to Wilmington Trust
prohibiting Wilmington Trust from paying dividends on Wilmington
Trust common stock.
As a result of the foregoing, Wilmington Trust was faced with a
narrowing set of alternatives.
In arriving at its opinion, Morgan Stanley, among other things:
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reviewed certain publicly available historical business and
financial information relating to Wilmington Trust and M&T,
respectively;
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reviewed certain financial projections prepared by the
management of Wilmington Trust and other financial data relating
to the business of Wilmington Trust provided to Morgan Stanley
by Wilmington Trust;
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discussed the past and current operations and financial
condition and the prospects of Wilmington Trust and M&T
with senior executives of Wilmington Trust and M&T,
respectively;
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reviewed the reported prices and trading activity for Wilmington
Trust common stock and M&T common stock;
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compared the financial performance of Wilmington Trust and
M&T and the prices and trading activity of Wilmington Trust
common stock and M&T common stock with that of certain
other publicly traded companies comparable with Wilmington Trust
and M&T, respectively, and their securities;
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reviewed the financial terms, to the extent publicly available,
of certain business combinations involving financial
institutions that Morgan Stanley believed to be generally
relevant to the merger;
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reviewed the merger agreement and certain related
documents; and
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performed such other analyses, reviewed such other information
and considered such other factors as Morgan Stanley deemed
appropriate.
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In arriving at its opinion, Morgan Stanley assumed and relied
upon, without independent verification, the accuracy and
completeness of the foregoing information that was publicly
available or supplied or otherwise made available to it by
Wilmington Trust and M&T and formed a substantial basis for
its opinion. Morgan Stanley did not perform certain analyses
(such as a discounted cash flow analysis or a dividend discount
analysis) that it would customarily prepare in connection with a
fairness opinion because of Wilmington Trusts
determination that such analyses were not meaningful as a result
of the extraordinary circumstances of Wilmington Trust at the
time the opinion was given. Morgan Stanley was unable to rely
on, and therefore, with the consent of Wilmington Trusts
Board of Directors, Morgan Stanley did not use in its analysis
the financial projections and related data provided to Morgan
Stanley by Wilmington Trust, which did not reflect or take into
account the potential imminent significant regulatory actions
and credit rating downgrades Wilmington Trust could face at the
time the opinion was given. In addition, Morgan Stanley assumed
that the merger would be consummated in accordance with the
terms set forth in the merger agreement without any waiver,
amendment or delay of any terms or conditions. Morgan Stanley
assumed that in connection with the receipt of all the necessary
governmental, regulatory or other approvals and consents
required for the proposed merger, no delays, limitations,
conditions or restrictions would be imposed that would have a
material adverse effect on the contemplated benefits expected to
be derived in the proposed merger. Morgan Stanley expressed no
opinion with respect to the fairness of the amount or nature of
the compensation to any of Wilmington Trusts officers,
directors or employees, or any class of such persons, relative
to the consideration to be received by the holders of Wilmington
Trust common stock in the merger. Morgan Stanley did not make
any independent valuation or appraisal of the assets or
liabilities (contingent or otherwise) of Wilmington Trust or
M&T or any of their respective subsidiaries, or concerning
the solvency or fair value of Wilmington Trust or M&T, and
Morgan Stanley was not furnished with such valuation or
appraisal.
Morgan Stanley is not an expert in the evaluation of loan
portfolios for the purposes of assessing the adequacy of
allowances for losses with respect thereto, and it did not make
an independent evaluation of the adequacy of such allowances by
Wilmington Trust or M&T. In addition, Morgan Stanley did
not review individual credit files nor did it make any physical
inspection of the properties or assets of Wilmington Trust or
M&T.
In arriving at its opinion, Morgan Stanley took into account the
foregoing and it considered recent instances where concerns
regarding the financial condition of, or imminent regulatory
action involving, a bank or financial institution triggered a
rapid deterioration of the institutions ability to
continue normal operations, and as a result of which the common
equity holders of the institution received substantially
diminished value, if any at all, for their equity.
Further, Morgan Stanleys opinion was necessarily based on
financial, economic, market and other conditions as in effect
on, and the information made available to it as of, the date of
its opinion. Morgan Stanley is not a legal, tax, accounting or
regulatory advisor. Morgan Stanley is a financial advisor only
and relied upon, without independent verification, the
assessment of M&T and Wilmington Trust and their advisors
with respect to legal, tax, accounting and regulatory matters.
Events occurring after the date of Morgan Stanleys opinion
may affect its opinion and the assumptions used in preparing it.
Morgan Stanley was retained to provide only a financial opinion
letter in connection with the merger. As a result, Morgan
Stanley was not involved in structuring, planning or negotiating
the merger. In arriving at its opinion, Morgan Stanley was not
authorized to solicit, and did not solicit, interest from any
party with respect to the acquisition, business combination or
other extraordinary transaction, involving Wilmington Trust, nor
did Morgan Stanley negotiate with any of the parties which
expressed interest in the possible acquisition of Wilmington
Trust or certain of its constituent businesses. Morgan Stanley
received a customary fee for its services, which was paid upon
the rendering of its financial opinion. Wilmington Trust also
agreed to reimburse Morgan Stanley for its reasonable expenses
incurred in performing its services. In addition, Wilmington
Trust has agreed to indemnify Morgan Stanley and its affiliates,
their respective directors, officers, agents and employees and
each person, if any, controlling Morgan Stanley or any of its
affiliates against certain liabilities and expenses, including
certain liabilities under the federal securities laws, related
to or arising out of Morgan Stanleys engagement. In the
two years prior to October 31, 2010, Morgan Stanley
provided financial advisory and financing services for M&T
and
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received fees in connection with such services. Morgan Stanley
may also seek to provide such services to M&T in the future
and expects to receive fees for the rendering of these services.
Morgan Stanley is a global financial services firm engaged in
the securities, investment management and individual wealth
management businesses. Morgan Stanleys securities business
is engaged in securities underwriting, trading and brokerage
activities, foreign exchange, commodities and derivatives
trading, prime brokerage, as well as providing investment
banking, financing and financial advisory services. Morgan
Stanley, its affiliates, directors and officers may at any time
invest on a principal basis or manage funds that invest, hold
long or short positions, finance positions, and may trade or
otherwise structure and effect transactions, for their own
account or the accounts of its customers, in debt or equity
securities or loans of M&T, Wilmington Trust, or any other
company, or any currency or commodity, that may be involved in
this transaction, or any related derivative instrument.
Morgan Stanley performed a variety of financial and comparative
analyses for purposes of rendering its opinion. The preparation
of a financial opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary
description. In arriving at its opinion, Morgan Stanley
considered the results of all of its analyses as a whole and did
not attribute any particular weight to any analysis or factor it
considered. Morgan Stanley believes that selecting any portion
of its analyses, without considering all analyses as a whole,
would create an incomplete view of the process underlying its
analyses and opinion. In addition, Morgan Stanley may have given
various analyses and factors more or less weight than other
analyses and factors, and may have deemed various assumptions
more or less probable than other assumptions. As a result, the
ranges of valuations resulting from any particular analysis
described below should not be taken to be Morgan Stanleys
view of the actual value of Wilmington Trust or M&T. In
performing its analyses, Morgan Stanley made assumptions with
respect to industry performance, general business and economic
conditions and other matters. Many of these assumptions relate
to factors that are beyond the control of Wilmington Trust or
M&T. Any estimates contained in Morgan Stanleys
analyses are not necessarily indicative of future results or
actual values, which may be significantly more or less favorable
than those suggested by such estimates.
Morgan Stanley conducted the analyses described below under
Summary of Joint Financial Analyses
solely as part of its analysis of the fairness of the exchange
ratio pursuant to the merger agreement from a financial point of
view to the holders of shares of Wilmington Trust common stock
and in connection with the delivery of its opinion to Wilmington
Trusts Board of Directors. These analyses do not purport
to be appraisals or to reflect the prices at which shares of
Wilmington Trust or M&T common stock might actually trade.
Morgan Stanleys opinion did not in any manner address the
prices at which M&T common stock will trade at any time,
including following the consummation of the merger, and Morgan
Stanley expressed no opinion or recommendation as to how any
stockholders of Wilmington Trust should vote at any
stockholders meeting to be held in connection with the
merger. Morgan Stanleys opinion did not address the
relative merits of the merger as compared to any other
alternative transaction or other business alternatives, or
whether or not such transaction or alternatives could be
achieved or were available. Morgan Stanley did not express any
view on, and its opinion did not address, any other term or
aspect of the fairness of the merger to, or any consideration
received in connection therewith by, the holders of any class of
securities, creditors, or other constituencies of Wilmington
Trust other than the holders of shares of Wilmington Trust
common stock.
The exchange ratio was determined through arms-length
negotiations between Wilmington Trust and M&T and was
approved by Wilmington Trusts Board of Directors. Morgan
Stanley did not recommend any specific exchange ratio to
Wilmington Trust or that any specific exchange ratio constituted
the only appropriate merger consideration for the merger.
Morgan Stanleys opinion and its presentation to Wilmington
Trusts Board of Directors was one of many factors taken
into consideration by Wilmington Trusts Board of Directors
in deciding to approve the merger agreement. Consequently, the
analyses as described below under Summary of
Joint Financial Analyses should not be viewed as
determinative of the view of Wilmington Trusts Board of
Directors with respect to the exchange ratio or of whether
Wilmington Trusts Board of Directors would have been
willing to agree to a different exchange ratio. Morgan
Stanleys opinion was approved by a committee of Morgan
Stanley investment banking and other professionals in accordance
with its customary practice.
42
Summary
of Joint Financial Analyses
The following is a summary of the material financial analyses
reviewed with Wilmington Trusts Board of Directors in
connection with Lazards and Morgan Stanleys
respective opinions, each dated October 31, 2010. The
preparation of a fairness opinion is a complex process, and, in
arriving at their opinions, Lazard and Morgan Stanley considered
the results of all of their analyses and reviews as a whole,
including the extraordinary situation of Wilmington Trust
described above in Opinion of Lazard
Frères & Co. LLC and
Opinion of Morgan Stanley & Co.
Incorporated.
Certain financial analyses summarized below include
information presented in tabular format. In order to fully
understand the financial analyses, the tables must be read
together with the text of each summary, as the tables alone do
not constitute a complete description of the financial analyses.
Considering the data in the tables below without considering the
full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of such financial
analyses. None of Wilmington Trust, M&T, Lazard, Morgan
Stanley or any other person assumes responsibility if future
results are different from those discussed, whether or not any
such difference is material.
No company utilized in the following analyses is identical to
Wilmington Trust or M&T, and no transaction utilized in the
following analyses is identical to the merger. In evaluating the
comparable companies and precedent transactions, Lazard and
Morgan Stanley made judgments and assumptions with regard to
general business, market and financial conditions and other
matters, which are beyond the control of Wilmington Trust and
M&T, such as the impact of competition on the business of
Wilmington Trust, M&T or the industry generally, industry
growth and the absence of any adverse material change in the
financial condition of Wilmington Trust, M&T or the
industry or in the financial markets in general, which could
affect the public trading value of the companies and the
aggregate value of the transactions to which they are being
compared. Mathematical analysis (such as determining the mean or
median) is not in itself a meaningful method of using comparable
company or transaction data.
Publicly Traded Comparable Companies
Analysis. Lazard and Morgan Stanley reviewed
publicly available information of selected publicly traded
comparable companies as of October 29, 2010. The comparable
companies included selected Mid-Atlantic Regional Banks and
selected Trust & Private Banks. Lazards and
Morgan Stanleys analysis distinguished comparable
companies with preferred stock issued in conjunction with
participation in the U.S. Department of Treasurys
Capital Purchase Program, or TARP, and banks that have repaid or
have not taken TARP funds. The comparable companies that have
repaid or have not taken TARP funds were considered in the
analysis, but Lazard and Morgan Stanley viewed these companies
as less directly comparable to Wilmington Trust than companies
that currently hold TARP funds in considering the publicly
traded comparable companies analysis.
The selected Mid-Atlantic Regional Banks consisted of the
following:
|
|
|
Mid-Atlantic Regional Bank
|
|
In TARP/Not in TARP
|
|
F.N.B. Corporation
|
|
Not in TARP
|
Fulton Financial Corp.
|
|
Not in TARP
|
WSFS Financial Corporation
|
|
In TARP
|
National Penn Bancshares, Inc.
|
|
In TARP
|
Susquehanna Bancshares, Inc.
|
|
In TARP
|
First Commonwealth Financial
|
|
Not in TARP
|
43
The selected Trust & Private Banks consisted of the
following:
|
|
|
Trust & Private Banks
|
|
In TARP/Not in TARP
|
|
Northern Trust Corporation
|
|
Not in TARP
|
City National Corporation
|
|
Not in TARP
|
Signature Bank
|
|
Not in TARP
|
Washington Trust Bancorp
|
|
Not in TARP
|
Bryn Mawr Bank Corp.
|
|
Not in TARP
|
Boston Private Financial Holdings Inc.
|
|
Not in TARP
|
Wintrust Financial Corporation
|
|
In TARP
|
PrivateBancorp, Inc.
|
|
In TARP
|
For each of the selected comparable Mid-Atlantic Regional Banks
and Trust & Private Banks, Lazard and Morgan Stanley
derived and compared the multiples of price to tangible book
value per share.
The following tables sets forth certain results of these
analyses of the comparable companies listed above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
Mean
|
|
|
Median
|
|
|
Multiple of Price to Tangible Book Value for Mid-Atlantic
Regional Banks in TARP
|
|
|
1.08x
|
|
|
|
1.29x
|
|
|
|
1.21x
|
|
|
|
1.27x
|
|
Multiple of Price to Tangible Book Value for Trust &
Private Banks in TARP
|
|
|
0.94x
|
|
|
|
1.14x
|
|
|
|
1.04x
|
|
|
|
1.04x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
Mean
|
|
|
Median
|
|
|
Multiple of Price to Tangible Book Value for Mid-Atlantic
Regional Banks Not in TARP
|
|
|
1.08x
|
|
|
|
1.95x
|
|
|
|
1.48x
|
|
|
|
1.40x
|
|
Multiple of Price to Tangible Book Value for Trust &
Private Banks Not in TARP
|
|
|
1.33x
|
|
|
|
1.90x
|
|
|
|
1.67x
|
|
|
|
1.75x
|
|
Precedent Transactions Analysis. Lazard and
Morgan Stanley reviewed publicly available information for
merger and acquisition transactions involving banks that they
deemed relevant to their analysis of the merger. The precedent
transactions included (1) distressed bank transactions and
(2) FDIC-assisted bank transactions. The transactions
reviewed by Lazard and Morgan Stanley were limited to
change-of-control
bank transactions since July 17, 2007 where the
targets assets were greater than $2.5 billion.
Distressed
Bank Transactions
The group of distressed bank transactions consisted of the
following:
Distressed
Bank Transactions
|
|
|
|
|
Announcement Date
|
|
Acquiror
|
|
Target
|
|
5/16/2010
|
|
Toronto-Dominion Bank
|
|
South Financial Group Inc.
|
7/26/2009
|
|
First Niagara Financial
|
|
Harleysville National Corp.
|
12/18/2008
|
|
M&T Bank Corp.
|
|
Provident Bankshares Corp.
|
12/3/2008
|
|
Capital One Financial Corp.
|
|
Chevy Chase Bank F.S.B.
|
1/11/2008
|
|
Bank of America Corp.
|
|
Countrywide Financial Corp.
|
10/24/2008
|
|
PNC Financial Services Group
|
|
National City Corp.
|
10/13/2008
|
|
Banco Santander S.A.
|
|
Sovereign Bancorp Inc.
|
10/3/2008
|
|
Wells Fargo & Co.
|
|
Wachovia Corp.
|
For each precedent distressed bank transaction listed above,
Lazard and Morgan Stanley derived and compared, among other
things, the ratio of the price per common share of the acquired
company to the tangible book value per share of the acquired
company based on the latest publicly available financial
statements and market
44
data at the time of the acquisition,
one-day
prior to the acquisition, one-week prior to the acquisition and
one-month prior to the acquisition.
The following table sets forth certain results of these analyses
of the precedent transactions listed above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
|
High
|
|
|
Mean
|
|
|
Median
|
|
|
Price as Multiple of Tangible Book Value at Transaction
|
|
|
0.17x
|
|
|
|
1.50x
|
|
|
|
0.68x
|
|
|
|
0.62x
|
|
Price as Multiple of Tangible Book Value
One-Day
Prior to Transaction
|
|
|
0.32x
|
|
|
|
0.88x
|
|
|
|
0.55x
|
|
|
|
0.45x
|
|
Price as Multiple of Tangible Book Value One-Week Prior to
Transaction
|
|
|
0.34x
|
|
|
|
1.12x
|
|
|
|
0.70x
|
|
|
|
0.77x
|
|
Price as Multiple of Tangible Book Value One-Month Prior to
Transaction
|
|
|
0.47x
|
|
|
|
1.52x
|
|
|
|
0.95x
|
|
|
|
0.96x
|
|
FDIC-Assisted
Bank Transactions
FDIC-Assisted
Bank Transactions
|
|
|
|
|
Announcement Date
|
|
Acquiror
|
|
Target
|
|
6/4/2010
|
|
National Australia Bank
|
|
TierOne Bank
|
4/30/2010
|
|
Popular
|
|
Westernbank Puerto Rico
|
4/30/2010
|
|
Mitsubishi UFJ Financial Group
|
|
Frontier Bank
|
4/23/2010
|
|
BMO Financial Group
|
|
AMCORE Bank
|
12/18/2009
|
|
City National Corp.
|
|
Imperial Capital Bank
|
12/18/2009
|
|
IMB Management Holdings
|
|
First Federal Bank of California
|
12/4/2009
|
|
New York Community Bancorp
|
|
AmTrust Bank
|
11/6/2009
|
|
East West Bancorp
|
|
United Commercial Bank
|
8/21/2009
|
|
Banco Bilbao Vizcaya Argentaria
|
|
Guaranty Bank
|
8/14/2009
|
|
BB&T
|
|
Colonial Bank
|
5/21/2009
|
|
BankUnited (Investor Consortium)
|
|
BankUnited
|
11/21/2008
|
|
U.S. Bancorp
|
|
Downey Savings & Loan Association
|
11/21/2008
|
|
U.S. Bancorp
|
|
PFF Bank & Trust
|
11/7/2008
|
|
Prosperity Bancshares
|
|
Franklin Bank
|
9/25/2008
|
|
JPMorgan Chase
|
|
Washington Mutual Bank
|
7/11/2008
|
|
IMB Management Holdings
|
|
IndyMac Bank
|
For each precedent FDIC-assisted bank transaction listed above,
Lazard and Morgan Stanley derived, among other things, the ratio
of the price per common share of the acquired company to the
tangible book value per share of the acquired company based on
the latest publicly available financial statements and market
data one-day
prior to the acquisition, one-week prior to the acquisition and
one-month prior to the acquisition.
The following table sets forth certain results of these analyses
of the precedent transactions listed above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
High
|
|
Mean
|
|
Median
|
|
Price as Multiple of Tangible Book Value at Transaction
|
|
|
0.00x
|
|
|
|
0.00x
|
|
|
|
0.00x
|
|
|
|
0.00x
|
|
Price as Multiple of Tangible Book Value
One-Day
Prior to Transaction
|
|
|
0.01x
|
|
|
|
0.56x
|
|
|
|
0.14x
|
|
|
|
0.04x
|
|
Price as Multiple of Tangible Book Value One-Week Prior to
Transaction
|
|
|
0.01x
|
|
|
|
0.54x
|
|
|
|
0.17x
|
|
|
|
0.07x
|
|
Price as Multiple of Tangible Book Value One-Month Prior to
Transaction
|
|
|
0.01x
|
|
|
|
0.57x
|
|
|
|
0.20x
|
|
|
|
0.16x
|
|
45
M&T
Valuation Summary
M&T Comparable Companies Analysis. Using
publicly available information, Lazard and Morgan Stanley
compared selected financial and market data of M&T with
similar data for the following companies:
BB&T Corporation
Capital One Financial Corp.
Comerica Incorporated
Fifth Third Bancorp
First Horizon National Corporation
Huntington Bancshares Incorporated
KeyCorp
Marshall & Illsley Corporation
PNC Financial Services
Regions Financial Corporation
SunTrust Banks, Inc.
Synovus Financial Corp.
U.S. Bancorp
Zions Bancorporation
Lazard and Morgan Stanley calculated the total shareholder
returns, as of October 29, 2010, over certain periods
versus the selected companies, an index of the selected
companies and the S&P 500. The following table sets forth
certain results of these analyses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-Year Return
|
|
|
5-Year Return
|
|
|
10-Year Return
|
|
|
Index of Peer Group
|
|
|
(53.0
|
)
|
|
|
(56.2
|
)
|
|
|
(41.7
|
)
|
S&P 500
|
|
|
(23.2
|
)
|
|
|
(1.3
|
)
|
|
|
(14.2
|
)
|
M&T
|
|
|
(14.9
|
)
|
|
|
(17.3
|
)
|
|
|
89.4
|
|
Lazard and Morgan Stanley calculated and compared various
financial multiples and ratios based on the latest publicly
available financial statements and market data. With respect to
the selected companies, Lazard and Morgan Stanley presented:
|
|
|
|
|
multiple of price to tangible book value per share;
|
|
|
|
multiple of price to reported book value per share; and
|
|
|
|
multiple of price to 2011 estimated earnings per share.
|
The following table sets forth certain results of these analyses
as of October 29, 2010:
|
|
|
|
|
|
|
|
|
|
|
Selected
|
|
|
|
|
Companies Median
|
|
M&T
|
|
Multiple of price to tangible book value per share
|
|
|
1.14x
|
|
|
|
2.33x
|
|
Multiple of price to reported book value per share
|
|
|
0.91x
|
|
|
|
1.19x
|
|
Multiple of price to 2011 estimated earnings per share
|
|
|
14.5x
|
|
|
|
12.5x
|
|
The following table sets forth the multiple of price to tangible
book value per share for M&T and its peer group as of
October 29, 2010 and the average multiple of price to
tangible book value per share for the prior
1-year,
3-year and
5-year
periods:
Multiple
of Price To Tangible Book Value per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
Current
|
|
|
1-Year
|
|
|
3-Year
|
|
|
5-Year
|
|
|
M&T
|
|
|
2.33x
|
|
|
|
2.73x
|
|
|
|
2.56x
|
|
|
|
3.24x
|
|
Peer group
|
|
|
1.26x
|
|
|
|
1.40x
|
|
|
|
1.49x
|
|
|
|
2.15x
|
|
46
M&T Dividend Discount Analysis. Lazard
and Morgan Stanley calculated a range of values for M&T
common stock implied by discounting to present values of
estimated M&T earnings and cash dividends. In performing
their analysis, Lazard and Morgan Stanley utilized the following
assumptions, among others:
|
|
|
|
|
assumed IBES consensus estimates for earnings and cash dividends
per share through 2012;
|
|
|
|
earnings growth estimated to be 7.0% per year from 2013 to 2015
based on IBES consensus long-term growth rate; and
|
|
|
|
cash dividends per share assumed to increase by $0.10 per
quarter from 2013 to 2015.
|
The calculations resulted in a range of fully diluted equity
values as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminal FY1 P/E Multiple
|
|
|
|
9.0x
|
|
|
11.0x
|
|
|
13.0x
|
|
|
15.0x
|
|
|
7.0%
|
|
$
|
67.86
|
|
|
$
|
79.88
|
|
|
$
|
91.91
|
|
|
$
|
103.64
|
|
8.0%
|
|
$
|
65.07
|
|
|
$
|
76.56
|
|
|
$
|
88.04
|
|
|
$
|
99.52
|
|
9.0%
|
|
$
|
62.44
|
|
|
$
|
73.40
|
|
|
$
|
84.37
|
|
|
$
|
95.33
|
|
10.0%
|
|
$
|
59.94
|
|
|
$
|
70.41
|
|
|
$
|
80.89
|
|
|
$
|
91.36
|
|
11.0%
|
|
$
|
57.57
|
|
|
$
|
67.58
|
|
|
$
|
77.59
|
|
|
$
|
87.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminal Tangible Book Value Multiple
|
|
|
|
1.75x
|
|
|
2.00x
|
|
|
2.25x
|
|
|
2.50
|
|
|
7.0%
|
|
$
|
80.47
|
|
|
$
|
90.01
|
|
|
$
|
99.54
|
|
|
$
|
109.08
|
|
8.0%
|
|
$
|
77.12
|
|
|
$
|
86.22
|
|
|
$
|
95.32
|
|
|
$
|
104.42
|
|
9.0%
|
|
$
|
73.94
|
|
|
$
|
82.63
|
|
|
$
|
91.32
|
|
|
$
|
100.02
|
|
10.0%
|
|
$
|
70.93
|
|
|
$
|
79.23
|
|
|
$
|
87.53
|
|
|
$
|
95.84
|
|
11.0%
|
|
$
|
68.07
|
|
|
$
|
76.01
|
|
|
$
|
83.94
|
|
|
$
|
91.88
|
|
M&Ts
Reasons for the Merger
M&T believes that the acquisition of Wilmington Trust will
complement M&Ts footprint and community banking
franchise, and, in particular, that Wilmington Trusts
Wealth Advisory Services and Corporate Client Services units
will grow and diversify the combined companys revenue
stream. M&T will seek to introduce those services to its
existing commercial banking customers across the M&T
footprint. The Board of Directors of M&T approved the
merger agreement after M&Ts senior management
discussed with the Board of Directors a number of factors,
including those described above and the business, assets,
liabilities, results of operations, financial performance,
strategic direction and prospects of Wilmington Trust.
M&Ts Board of Directors did not consider it
practicable to, and did not attempt to, quantify or otherwise
assign relative weights to the specific factors it considered in
reaching its determination. M&Ts Board of Directors
viewed its position as being based on all the information and
the factors presented to and considered by it. In addition,
individual directors may have given different weights to
different information and factors.
Board of
Directors and Management of M&T Following Completion of the
Merger
Upon completion of the merger, the current directors and
officers of M&T are expected to continue in their current
positions, and the number of directors constituting the whole
Board of Directors of M&T shall be increased by one.
Mr. Donald E. Foley, Wilmington Trusts Chairman of
the Board and Chief Executive Officer, will be appointed as a
director of M&T. Information about the current M&T
directors and executive officers can be found in M&Ts
proxy statement filed with the SEC on March 5, 2010, which
is incorporated by reference into this proxy
statement/prospectus, and information about Mr. Foley in
his capacity as a director of Wilmington Trust can be found in
Wilmington Trusts proxy statement filed with the SEC on
February 22, 2010, which is also incorporated by reference
into this proxy statement/prospectus. See Where You Can
Find More Information on Page 82.
47
Public
Trading Markets
M&T common stock is listed on the NYSE under the symbol
MTB. Wilmington Trust common stock is listed on the
NYSE under the symbol WL. Upon completion of the
merger, Wilmington Trust common stock will be delisted from the
NYSE and thereafter will be deregistered under the Exchange Act.
The M&T common stock issuable in the merger will be listed
on the NYSE.
Wilmington
Trust Stockholders Do Not Have Dissenters Appraisal
Rights in the Merger
Appraisal rights are statutory rights that, if applicable under
law, enable stockholders to dissent from an extraordinary
transaction, such as a merger, and to demand that the
corporation pay the fair value for their shares as determined by
a court in a judicial proceeding instead of receiving the
consideration offered to stockholders in connection with the
extraordinary transaction. Appraisal rights are not available in
all circumstances, and exceptions to these rights are provided
under the Delaware General Corporation Law.
Unless the certificate of incorporation otherwise provides (and
the restated certificate of incorporation of Wilmington Trust
does not so provide), Delaware law provides that no appraisal
rights are available for shares of any class or series of stock,
which stock, at the record date fixed to determine the
stockholders entitled to receive notice of and vote at a meeting
of stockholders to act upon an agreement and plan of merger, was
either listed on a national securities exchange or held of
record by more than 2,000 holders. Notwithstanding the
foregoing, appraisal rights are available for shares of any
class or series of stock if the holders thereof are required by
the terms of an agreement and plan of merger to accept for such
stock anything except (a) shares or depository receipts of
another corporation which at the effective date of the merger or
consolidation will be either listed on a national securities
exchange or held of record by more than 2,000 holders,
(b) shares of stock or depositary receipts of the surviving
corporation in the merger or consolidation, (c) cash for
fractional shares or (d) any combination of (a)-(c).
Consequently, because each of M&Ts and Wilmington
Trusts common stock is listed on the NYSE, and Wilmington
Trust stockholders are receiving M&T common stock in
exchange for their shares of Wilmington Trust common stock (and
cash in lieu of fractional shares), Wilmington Trusts
stockholders do not have dissenters appraisal rights in
the merger with respect to their shares of Wilmington Trust
common stock.
Regulatory
Approvals Required for the Merger
Each of M&T and Wilmington Trust has agreed to use its
commercially reasonable efforts to obtain all regulatory
approvals required to complete the merger and the other
transactions contemplated by the merger agreement. These
approvals include approval from the Federal Reserve Board and
the Office of the State Bank Commissioner of the State of
Delaware, among others. M&T and Wilmington Trust have
filed, or are in the process of filing, applications and
notifications to obtain these regulatory approvals.
Federal Reserve Board. The transactions
contemplated by the merger agreement are subject to approval by
the Federal Reserve Board pursuant to Section 3 and
Section 4 of the Bank Holding Company Act of 1956.
Additional Regulatory Approvals and
Notices. The transactions contemplated by the
merger agreement are also subject to approval by the Office of
the State Bank Commissioner of the State of Delaware.
Applications and notifications may be filed with various other
state regulatory agencies.
M&T and Wilmington Trust believe that the transactions
contemplated by the merger agreement do not raise substantial
antitrust or other significant regulatory concerns and that they
will be able to obtain all requisite regulatory approvals on a
timely basis without the imposition of any condition that would
have a material adverse effect on M&T or Wilmington Trust.
However, there can be no assurances that such approvals will be
received on a timely basis, or as to our ability to obtain the
approvals on satisfactory terms or the absence of litigation
challenging such approvals. There can likewise be no assurances
that U.S. or state regulatory authorities will not attempt
to challenge the merger on antitrust grounds or for other
reasons, or, if such a challenge is made, as to the result of
such challenge. The parties obligations to complete the
transactions contemplated by the merger agreement are subject to
a number of conditions, including the receipt of all required
regulatory consents and approvals, and, in the case of M&T,
any such approval must not impose any restriction or condition
that, in M&Ts good faith judgment, would
48
reasonably be expected to have a material adverse effect on
M&T or Wilmington Trust, measured on a scale relative to
Wilmington Trust.
Dividends
The payment, timing and amount of dividends with respect to
M&T after the merger is subject to the determination of
M&Ts Board of Directors and may change at any time.
In the third quarter of 2010, M&T declared a dividend of
$0.70 per share of M&T common stock. For comparison, if the
merger had occurred prior to the dividend paid by M&T in
the third quarter of 2010, Wilmington Trust common stockholders
in receipt of the merger consideration (based on the exchange
ratio) would hypothetically have received a dividend in the
third quarter of 2010 equivalent to $0.036 per share of
Wilmington Trust common stock.
The merger agreement permits each of M&T and Wilmington
Trust to continue to pay regular quarterly cash dividends to its
stockholders prior to the completion of the merger. The
agreements separately entered into by Wilmington Trust and
M&T with the U.S. Department of the Treasury with
respect to their individual participation in the TARP Capital
Purchase Program contain limitations on certain actions of
M&T and Wilmington Trust, including, but not limited to,
the payment of cash dividends in excess of their current
quarterly cash dividends. As directed by its regulators,
Wilmington Trusts Board of Directors did not declare a
dividend on its common stock following the 2010 third quarter.
The payment, timing and amount of dividends by M&T or
Wilmington Trust on their common stock in the future, either
before or after the merger is completed, are subject to the
determination of each companys respective Board of
Directors and depend on cash requirements, contractual
restrictions, financial condition and earnings, legal and
regulatory considerations and other factors.
For further information, please see Comparative Market
Prices and Dividends on Page 69 and Recent
Developments on Page 7.
Interests
of Wilmington Trusts Directors and Executive Officers in
the Merger
In considering the recommendation of Wilmington Trusts
Board of Directors that you vote to adopt the merger agreement,
you should be aware that Wilmington Trusts directors and
executive officers may have financial interests in the merger
that are different from, or in addition to, the interests of
Wilmington Trusts stockholders generally. Wilmington
Trusts Board of Directors was aware of and considered
these interests, among other matters, in approving and adopting
the merger agreement and the transactions contemplated thereby,
and in recommending that Wilmington Trusts stockholders
vote in favor of adoption of the merger agreement. For purposes
of all of the Wilmington Trust agreements and plans described
below, the consummation of the transactions contemplated by the
merger agreement generally will constitute a change in control
of Wilmington Trust.
Equity Compensation Awards. At the effective
time of the merger, any vesting conditions applicable to any
shares of restricted stock of Wilmington Trust or restricted
stock units payable in shares of Wilmington Trust common stock
granted pursuant to Wilmington Trusts stock plans will,
subject to applicable law and otherwise subject to the terms of
the applicable award or plan, lapse, and such shares of
restricted stock or restricted stock units will be treated the
same as all other shares of Wilmington Trust common stock in
accordance with the terms of the merger agreement. See the
section of this proxy statement/prospectus entitled The
Agreement and Plan of Merger Terms of the
Merger on Page 53.
Assuming that the merger is consummated on April 1, 2011,
subject to applicable law or the terms of the applicable award
or plan, the number of unvested shares of restricted Wilmington
Trust common stock held by each of Donald E. Foley, David R.
Gibson, Robert V.A. Harra Jr., William J. Farrell II, Mark A.
Graham, Michael A. DiGregorio and Kevyn N. Rakowski that would
vest and become free of restrictions is 23,463; 28,623; 25,520;
24,009; 20,074; 2,617; and 2,097, respectively. The number of
unvested restricted stock units payable in shares of Wilmington
Trust common stock held by Wilmington Trusts six
non-employee directors and Mr. Foley (in respect of the
period he served as a non-employee director) (as a group) that
would vest and become free of restrictions is 18,029.
In addition, upon consummation of the merger, all outstanding
and unexercised options to acquire shares of Wilmington Trust
common stock (whether vested or unvested) will be cancelled
without payment.
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Severance Agreements. Certain of Wilmington
Trusts subsidiaries have entered into substantially
similar severance agreements with all of Wilmington Trusts
executive officers. For each executive officer, the severance
agreement provides for the payment of certain severance payments
if the executive officers employment is terminated
(1) by Wilmington Trust upon or within two years following
a change in control (as defined in the severance
agreement, and including the merger with M&T) for any
reason other than for cause or the executive
officers death or disability (each as defined
in the severance agreement), (2) by the executive officer
upon or within two years after a change in control for
good reason (as defined in the severance agreement),
or (3) before a change in control by Wilmington Trust other
than for cause or by the executive officer for good reason and
in either case it is reasonably demonstrated that the
termination of employment was at the request of a third
party (as defined in the applicable severance agreement)
that has taken steps reasonably calculated to effect a change in
control or otherwise arose in connection with or in anticipation
of a change in control, hereinafter referred to as a Qualifying
Termination.
Under these severance agreements, upon a Qualifying Termination,
the executive officer is entitled to severance pay in a lump sum
equal to three years of the executive officers
(1) highest base salary in the 12 months preceding
termination of his or her employment and (2) bonus and
incentive payments for the preceding calendar year, all
discounted to present value at a discount rate of the rate paid
on the termination date on U.S. Treasury bills with
maturities of one and one-half years, and net of imputed income.
In addition, the executive officer generally will receive
medical, life, disability, and
health-and-accident
benefits at the subsidiarys expense for three years
following the date of his or her Qualifying Termination. To the
extent these benefits constitute excess parachute
payments under Section 4999 of the Code, the benefits
will be reduced to the maximum amount of severance benefits that
the executive officer may receive without becoming subject to
the excise tax.
Assuming that the excess parachute payment cutback under the
terms of the severance agreements as described above does not
apply, and that all executive officers experience a Qualifying
Termination immediately following the merger, the maximum cash
severance payments and benefits that may be paid, subject to
applicable law or the terms of the applicable severance
agreement, to each of Messrs. Foley, Gibson, Harra,
Farrell, Graham and DiGregorio and Ms. Rakowski is
approximately $3,751,525, $1,853,923, $1,807,402, $2,194,907,
$2,020,379, $1,309,032, and $940,985, respectively.
Amended and Restated Directors Deferred Fee
Plan. Pursuant to the Amended and Restated
Directors Deferred Fee Plan, individuals who are outside
directors of Wilmington Trust may elect to defer receipt of any
cash portion of their directors fees until they cease
service as directors. Each director may elect to earn a yield on
the deferred portion based on (1) yields Wilmington Trust
pays on certain of its deposit products
and/or
(2) changes in the price of Wilmington Trusts common
stock, together with dividends on that stock at the rate earned
on Wilmington Trusts outstanding stock. The aggregate
amount of the account balances of the non-employee directors and
Mr. Foley (in respect of the period he served as a
non-employee director) under the Amended and Restated
Directors Deferred Fee Plan, based on the closing price of
Wilmington Trusts common stock on November 11, 2010
of $4.39 per share, is approximately $33,748, as a group.
Wilmington
Trust Non-Qualified
Retirement Plan. Certain executives, including
Wilmington Trusts executive officers, participate in a
Supplemental Executive Retirement Plan, or SERP. Upon a change
in control, subject to applicable law or the terms of the SERP,
executives become vested in their right to receive accrued
benefits under the SERP. Based on benefits accrued as of
December 31, 2010, Messrs. Foley, Gibson, Harra,
Farrell, Graham and DiGregorio and Ms. Rakowski, would be
vested in approximately $112,838, $2,657,258, $6,540,416,
$2,882,729, $1,725,558, $2,207,472, and $235,059 in SERP
benefits, respectively. These amounts may be different as of the
date of the closing of the merger based on the extent of
additional benefit accruals and changes in vested status.
Membership on M&Ts Board. Upon the
consummation of the merger, Mr. Foley, Chairman of the
Board of Directors and Chief Executive Officer of Wilmington
Trust, will become a member of the M&T Board of Directors.
For more information concerning the M&T Board of Directors
following completion of the merger, see The
Merger Board of Directors and Management of M&T
Following Completion of the Merger on Page 47.
Indemnification and Insurance. The merger
agreement requires M&T to indemnify and advance expenses to
present and former directors and officers of Wilmington Trust
and its subsidiaries against any costs or expenses, judgments,
fines, losses, claims, damages, or liabilities or amounts paid
in settlement incurred in connection with any
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actual or threatened claim, action, suit, proceeding or
investigation arising out of the fact that such person is or was
a director or officer of Wilmington Trust or any matters arising
out of consummation of the merger, whether asserted or claimed
prior to or following the merger. M&T is also required, to
the fullest extent permitted by law, to maintain in effect for a
period of six years following consummation of the merger all
indemnification provisions under Wilmington Trusts
restated certificate of incorporation or amended and restated
bylaws or specified indemnification agreements in effect on the
date of the merger agreement. The merger agreement also provides
that, for a period of six years after completion of the merger,
M&T will provide directors and officers
liability insurance and fiduciary insurance to reimburse current
and former directors and officers with respect to claims arising
at or prior to the completion of the merger. The insurance will
contain terms and conditions that are not less advantageous than
the current coverage provided by Wilmington Trust, except that
M&T is not required to incur annual premium expense greater
than 300% of Wilmington Trusts current annual
directors and officers liability insurance premium.
In lieu of the insurance described in the preceding sentences,
M&T, or Wilmington Trust in consultation with M&T (for
an aggregate price of no more than 325% of Wilmington
Trusts current annual directors and officers
liability insurance premium), may purchase prepaid or
tail directors and officers liability
insurance coverage equivalent to the coverage described in the
preceding sentences.
Litigation
Relating to the Merger
On November 5, 2010, two purported stockholders of
Wilmington Trust filed lawsuits in the Delaware Court of
Chancery captioned Medich v. Wilmington
Trust Corporation, et al., C.A. No. 5958 (Del.
Ch.) and Yi v. Wilmington Trust Corporation, et
al., C.A. No. 5959 (Del. Ch.). On November 9,
2010, a third purported stockholder of Wilmington Trust filed a
lawsuit in the Delaware Court of Chancery captioned
Burie v. Foley, et al., C.A. No. 5970 (Del.
Ch.). On December 8, 2010, these complaints were
consolidated under the caption In re Wilmington
Trust Corporation Shareholders Litigation, C.A.
No. 5958-VCL
(Del. Ch.). On December 10, 2010, plaintiffs filed an
amended and consolidated complaint, which we refer to as the
Consolidated Complaint. On December 20, 2010, defendants
moved to dismiss the Consolidated Complaint.
The Consolidated Complaint names as defendants Wilmington Trust,
each of the current members of Wilmington Trusts Board of
Directors, whom we refer to as the Director Defendants, M&T
and Merger Sub. It is brought on behalf of a putative class of
Wilmington Trusts common stockholders and seeks a
declaration that it is properly maintainable as a class action.
The Consolidated Complaint alleges that the Director Defendants
breached their fiduciary duties by failing to maximize
stockholder value in connection with the merger and also alleges
that M&T and Merger Sub aided and abetted those breaches of
fiduciary duty. It further alleges that the Director Defendants
improperly favored M&T and discouraged alternative bids by
agreeing to the merger agreements no solicitation
provision, termination fee provision, and notification clause.
In addition, the Consolidated Complaint claims that the
consideration to be received by Wilmington Trusts common
stockholders is inadequate and unfair. Finally, the Consolidated
Complaint claims that the
Form S-4
filed by defendants in connection with the merger omits material
information. It alleges deficiencies in the descriptions of
negotiations with interested parties, failure to disclose the
identity of one financial advisor and the fees payable to all
financial advisors, and failure to adequately explain the
financial advisors valuation analyses. The Consolidated
Complaint claims that without this information, Wilmington
Trusts shareholders cannot meaningfully determine whether
to approve the merger.
The Consolidated Complaint seeks declaratory and injunctive
relief to prevent the consummation of the merger, a constructive
trust over any benefits improperly received by defendants, and
costs including plaintiffs attorneys and
experts fees.
Each of M&T and Wilmington Trust believes that the claims
asserted are without merit and intends to vigorously defend
against this lawsuit.
Securities
Litigation
Between November 18, 2010, and December 10, 2010, four
purported purchasers of Wilmington Trusts common stock
filed lawsuits in the United States District Court for the
District of Delaware captioned Pipefitters Local 537 Annuity
Fund v. Wilmington Trust Corporation, et al., C.A.
No. 10-990-LPS
(D. Del.), Rooney v. Wilmington Trust Corporation,
et al., C.A.
No. 10-995-LPS
(D. Del.), Elzagha v. Wilmington Trust Corporation,
et al., C.A.
No. 10-1020-LPS
(D. Del.) and Lynch v. Wilmington
Trust Corporation, et al., C.A.
No. 10-1086
(D. Del.).
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One or more of the lawsuits asserted claims against Wilmington
Trust, certain current and former executive officers and
directors of Wilmington Trust, J.P. Morgan and Keefe,
Bruyette & Woods. All four lawsuits allege violations
of Sections 10(b) and 20(a) of the 1934 Securities Exchange
Act and
Rule 10b-5
promulgated thereunder. One of the lawsuits also alleges
violations of Section 11 of the 1933 Securities Act. All of
the lawsuits allege that the defendants knowingly made
materially false and misleading statements and omissions in
press releases and securities filings regarding Wilmington
Trusts loan loss provisions and reserves, and its loan
charge offs. The complaints allege that these actions
artificially inflated the price of Wilmington Trusts
common stock and that the stock price fell as a result of
certain disclosures that allegedly revealed the purported
misrepresentations. One of the lawsuits alleges that defendants
made false and materially misleading statements in the materials
used in the Wilmington Trusts February 23, 2010,
offering of common stock. All of the lawsuits seek compensatory
damages, interest, and costs including attorneys and
experts fees.
On January 18, 2011, four groups of purported purchasers of
Wilmington Trusts common stock filed motions in the United
States District Court for the District of Delaware seeking to
consolidate these four lawsuits and be appointed lead
plaintiffs. The Court has not yet ruled on these motions.
Wilmington Trust believes the claims asserted in these lawsuits
are without merit and intends to vigorously defend against these
lawsuits.
ERISA
Litigation
On December 20, 2010, two participants in the Wilmington
Trust Thrift Savings Plan, which we refer to as the Plan,
filed a lawsuit in the United States District Court for the
District of Delaware captioned Outten, et al., v.
Wilmington Trust Corporation, et al., C.A.
No. 10-1114-SD
(D. Del.), which we refer to as the Outten lawsuit. On
January 31, 2011, another participant in the Plan filed a
lawsuit in the United States District Court for the District of
Delaware captioned Gray v. Wilmington
Trust Corporation, et al., C.A. No. 11-101 UNA (D.
Del.), which we refer to as the Gray lawsuit. Both lawsuits name
as defendants Wilmington Trust, Wilmington Trust Company,
the Plans benefits administration committee, which we
refer to as the Committee, and certain executive officers and
employees who are alleged to have served on the Committee during
the class periods from January 1, 2008 to the present for
the Outten lawsuit and December 31, 2006 to
December 31, 2010 for the Gray lawsuit, which we refer to
as the Class Periods. The Gray lawsuit also names as a
defendant a former director and executive officer of Wilmington
Trust.
These lawsuits are brought on behalf of a purported class of all
participants and beneficiaries of the Plan whose Plan accounts
were invested in Wilmington Trusts common stock during the
Class Periods. The complaints allege that defendants
violated the Employee Retirement Income Security Act, or ERISA,
by failing to act solely in the interest of the Plans
participants and beneficiaries and by failing to exercise the
required skill and care in administering the Plan during the
Class Periods. The complaints claim that defendants allowed
investment of the Plans assets in Wilmington Trust common
stock throughout the Class Periods despite the fact that
defendants knew or should have known that such investment was
not a suitable investment for the Plan. The complaints further
allege that defendants failed to provide them with necessary
information regarding Wilmington Trusts financial
condition and that defendants placed their own pecuniary
interests above the interests of the Plans participants.
Defendants also are alleged to have failed to share with the
fiduciaries of the Plan information regarding Wilmington Trust
and failed to monitor the fiduciaries.
These lawsuits seek declaratory and injunctive relief, damages
in the form of Plan losses, and awards of attorneys fees.
Wilmington Trust believes the claims asserted are without merit
and intends to vigorously defend against these lawsuits.
THE
AGREEMENT AND PLAN OF MERGER
The following describes certain aspects of the merger,
including certain material provisions of the merger agreement.
The following description of the merger agreement is subject to,
and qualified in its entirety by reference to, the merger
agreement, which is attached to this proxy statement/prospectus
as Annex A and is incorporated by
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reference into this proxy statement/prospectus. We urge you
to read the merger agreement carefully and in its entirety, as
it is the legal document governing this merger.
Terms of
the Merger
Each of M&Ts Board of Directors and Wilmington
Trusts Board of Directors has declared advisable the
merger agreement, which provides for the merger of Merger Sub
with and into Wilmington Trust, with Wilmington Trust being the
surviving corporation in the merger and a wholly owned
subsidiary of M&T. Each share of Wilmington Trust common
stock, par value $1.00 per share, issued and outstanding
immediately prior to the completion of the merger, except for
specified shares of Wilmington Trust common stock held by
Wilmington Trust or M&T or their subsidiaries, will be
converted into the right to receive 0.051372 of a share of
M&T common stock, which we refer to herein as the exchange
ratio. If the number of shares of common stock of M&T
changes before the merger is completed because of a
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
change in capitalization, then a proportionate adjustment will
be made to the exchange ratio.
M&T will not issue any fractional shares of M&T common
stock in the merger. The exchange agent will aggregate all
fractional interests in M&T common stock and sell such
shares in a transaction or transactions executed on one or more
stock exchanges and deliver the cash proceeds of any such sales
to Wilmington Trust common stockholders in lieu of their
fractional interest shares of M&T common stock. Any costs
incurred in connection with such a sale (including any
commissions, currency exchange fees, transfer taxes and other
transaction costs) will be borne by M&T.
The articles of incorporation attached as Exhibit A to the
merger agreement will be the articles of incorporation of the
surviving corporation (the name of the surviving corporation
will be Wilmington Trust Corporation), and the bylaws of
Merger Sub, as then in effect, will be the bylaws of the
surviving corporation.
Closing
and Effective Time of the Merger
The merger will be completed only if all conditions to the
merger discussed in this proxy statement/prospectus and set
forth in the merger agreement are either satisfied or waived.
See Conditions to Complete the Merger
below.
The merger will become effective when the certificate of merger
is filed with the Secretary of State of the State of Delaware.
However, we may agree to a later time for completion of the
merger and specify that time in accordance with Delaware law. In
the merger agreement, we have agreed to cause the completion of
the merger to occur no later than the third business day
following the satisfaction or waiver of the last of the
conditions specified in the merger agreement, or on another
mutually agreed date. It currently is anticipated that the
completion of the merger will occur by mid-year 2011, subject to
the receipt of regulatory approvals and other customary closing
conditions, but we cannot guarantee when or if the merger will
be completed.
Treatment
of Wilmington Trust Stock Options and Wilmington
Trust Stock Awards
Under the terms of the merger agreement, upon completion of the
merger, the outstanding and unexercised stock options to acquire
Wilmington Trust common stock will be cancelled and cease to
exist, and no payment will be made with respect thereto.
With respect to shares of restricted stock and each other right
of any kind to receive shares of Wilmington Trust common stock
(other than stock options) granted under Wilmington Trusts
stock plans, under the terms of the merger agreement, upon the
completion of the merger, such outstanding rights, subject to
applicable law and otherwise subject to the terms of the
applicable award or plan, will become fully vested and be
converted into the right to receive the merger consideration.
The number of unrestricted shares of M&T common stock will
equal: (a) the number of shares of restricted Wilmington
Trust common stock as of immediately prior to the completion of
the merger, multiplied by (b) the exchange ratio of
0.051372, with fractional shares to be satisfied through a cash
payment in accordance with the terms of the merger agreement.
The foregoing applies to shares issued under Wilmingtons
1996 Long-Term Incentive Plan, 1999 Long-Term Incentive Plan,
1999 Executive Incentive Plan,
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Amended and Restated 2002 Long-Term Incentive Plan, 2001
Non-Employee Directors Stock Option Plan, 2004 Executive
Incentive Plan, Amended and Restated 2005 Long-Term Incentive
Plan, Amended and Restated Directors Deferred Fee Plan,
2009 Executive Incentive Plan, and 2009 Long-Term Incentive Plan.
If any shares of Wilmington Trust restricted stock are held by
an employee of Wilmington Trust subject to limitations under
applicable law relating to the accelerated vesting of benefits,
such shares of restricted stock will vest, subject to applicable
law and otherwise subject to the terms of the applicable award
or plan, immediately following the completion of the merger.
Treatment
of Wilmington Trust Preferred Stock
Each share of Wilmington Trusts Fixed Rate Cumulative
Perpetual Preferred Stock, Series A, which we refer to
herein as Wilmington Trust Series A Preferred Stock,
issued and outstanding immediately prior to the merger will be
converted into the right to receive one one-hundredth (1/100) of
a share of a series of M&T preferred stock to be
designated, prior to the completion of the merger, as Fixed Rate
Cumulative Perpetual Preferred Stock, Liquidation Preference
$100,000.00 per share, and otherwise having rights, preferences,
privileges and voting powers such that the rights, preferences,
privileges and voting powers of the Wilmington
Trust Series A Preferred Stock are not adversely
affected by such conversion and having rights, preferences,
privileges and voting powers, and limitations and restrictions
that, taken as a whole, are not materially less favorable than
the rights, preferences, privileges and voting powers, and
limitations and restrictions of the Wilmington
Trust Series A Preferred Stock immediately prior to
such conversion, taken as a whole; provided, however, that the
voting powers of the M&T preferred stock to be issued upon
conversion of the Wilmington Trust Series A Preferred
Stock will be substantially the same as the voting powers of the
Wilmington Trust Series A Preferred Stock.
Treatment
of Wilmington Trust Warrant
The warrant issued on December 12, 2008 to the
U.S. Department of the Treasury in connection with the
Wilmington Trust Series A Preferred Stock will be
automatically converted into a warrant to purchase M&T
common stock adjusted in accordance with the exchange ratio, and
the exercise price will be equal to the exercise price for the
warrant divided by the exchange ratio.
Conversion
of Shares; Exchange of Certificates
The conversion of Wilmington Trust common stock into the right
to receive the merger consideration will occur automatically
upon completion of the merger. As promptly as reasonably
practicable after completion of the merger, an exchange agent
will exchange certificates or book entry shares representing
shares of Wilmington Trust stock for the merger consideration,
without interest, to be received by holders of Wilmington Trust
stock in the merger pursuant to the terms of the merger
agreement. M&T will appoint Registrar and Transfer Company
as exchange agent in the merger to exchange certificates or book
entry shares for the merger consideration and perform other
duties as explained in the merger agreement. The exchange of any
book entry shares will be made in accordance with the exchange
agents customary procedures with respect to securities
presented by book entry.
If any M&T shares are to be issued, or cash payment in lieu
of fractional shares made, in a name other than that in which
the Wilmington Trust stock certificates or book entry shares
surrendered in exchange for the merger consideration are
registered, the person requesting the exchange must pay any
transfer or similar taxes required by reason of the issuance of
the new M&T shares or the payment of the cash in lieu of
fractional shares in a name other than that of the registered
holder of the Wilmington Trust stock certificate or book entry
share surrendered, or must establish to the satisfaction of
M&T or the exchange agent that any such taxes have been
paid or are not applicable.
Letter of Transmittal. As soon as reasonably
practicable after the completion of the merger, and in any event
not later than the second business day following the completion
of the merger, the exchange agent will mail a letter of
transmittal to those persons who were Wilmington Trust
stockholders immediately prior to the completion of the merger.
This mailing will contain instructions on how to surrender
shares of Wilmington Trust stock in exchange for the merger
consideration the holder is entitled to receive under the merger
agreement.
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If a certificate for Wilmington Trust stock has been lost,
stolen or destroyed, the exchange agent will issue the
consideration properly payable under the merger agreement upon
receipt of an affidavit of that fact by the claimant, and, if
reasonably required by M&T or the exchange agent,
appropriate and customary indemnification.
Withholding. Each of M&T, Wilmington
Trust and the exchange agent will be entitled to deduct and
withhold from any cash in lieu of fractional shares of M&T
payable to any Wilmington Trust stockholder such amounts as it
is required to deduct and withhold under any federal, state,
local or foreign tax law. If any such amounts are withheld,
these amounts will be treated for all purposes of the merger as
having been paid to the stockholders from whom they were
withheld.
Dividends
and Distributions
Prior to the completion of the merger, Wilmington Trust and its
subsidiaries may not make, declare or pay any dividend or
distribution on its capital stock or redeem, repurchase or
otherwise acquire any shares of its capital stock (or any
securities or obligations convertible or exchangeable or
exercisable for shares of its capital stock), other than:
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regular quarterly dividends on its common stock at a rate no
greater than the rate paid by it during the fiscal quarter
immediately preceding the execution of the merger agreement,
which rate was $0.01 per share of common stock, and payment
dates consistent with past practice;
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dividends from Wilmington Trusts wholly owned subsidiaries
to only it or other of its wholly owned subsidiaries;
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required dividends on Wilmington Trusts preferred stock or
the preferred stock of its subsidiaries;
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required dividends on the common stock of any of its
subsidiaries that is a real estate investment trust; or
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the distribution of rights pursuant to Wilmington Trusts
rights agreement (other than in connection with the transactions
contemplated by the merger agreement).
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Representations
and Warranties
The merger agreement contains customary representations and
warranties of Wilmington Trust and M&T relating to their
respective businesses. With the exception of certain
representations that must be true and correct in all material
respects and with the exception of the representations
concerning capitalization and the absence of a material adverse
effect, which must be true and correct in all respects, no
representation or warranty will be deemed untrue or incorrect as
a consequence of the existence or absence of any fact,
circumstance or event unless that fact, circumstance or event,
individually or when taken together with all other facts,
circumstances or events inconsistent with any representation,
has had or is reasonably likely to have a material adverse
effect.
For the purposes of the merger agreement, a material
adverse effect with respect to M&T or Wilmington
Trust, as the case may be, means any fact, circumstance, event,
change, effect, development or occurrence that, individually or
in the aggregate, together with all other facts, circumstances,
events, changes, effects, developments or occurrences, directly
or indirectly (a) prevents or materially impairs the
ability of such party to timely consummate the transactions
contemplated by the merger agreement or (b) has had or
would reasonably be expected to result in a material adverse
effect on the financial condition, results of operations or
business (including, without limitation, material adverse
changes in assets under management, the provision for loan
losses, past due, criticized or nonperforming assets or tangible
book value) of such party and its subsidiaries taken as a whole,
other than, with respect to (b) above, to the extent that
effect results from:
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changes after the date of the merger agreement in GAAP or
regulatory accounting requirements;
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changes after the date of the merger agreement in laws, rules or
regulations of general applicability to companies in the
industries in which such party and its subsidiaries operate;
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changes after the date of the merger agreement in global,
national or regional political conditions or general economic or
market conditions (including changes in prevailing interest
rates, credit availability and liquidity, currency exchange
rates, and price levels or trading volumes in the United States
or foreign
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securities markets) affecting other companies in the industries
in which such party and its subsidiaries operate;
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after the date of the merger agreement, general changes in the
credit markets or general downgrades in the credit
markets; or
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any outbreak or escalation of hostilities, declared or
undeclared acts of war or terrorism;
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except, in each case listed above, to the extent that the
effects of such change disproportionately affect such party and
its subsidiaries, taken as a whole, as compared to other
companies in the industry in which such party and its
subsidiaries operate; or
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the public disclosure of the merger agreement and the impact
thereof on relationships with customers or employees;
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actions or omissions taken with the prior written consent of the
other party or expressly required by the merger
agreement; or
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failure, in and of itself, to meet earnings projections, but not
including any underlying causes thereof unless separately
excluded by one of the preceding clauses, or changes in the
trading price of a partys common stock, in and of itself,
but not including any underlying causes unless separately
excluded by one of the preceding clauses.
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The representations and warranties in the merger agreement do
not survive the effective time of the merger and, as described
below under Termination, if the merger
agreement is validly terminated, there will be no liability
under the representations and warranties of the parties, or
otherwise under the merger agreement, unless a party knowingly
breached the merger agreement.
The merger agreement contains representations and warranties
made by Wilmington Trust to M&T and Merger Sub relating to
a number of matters, including the following:
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corporate matters, including due organization and qualification;
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capitalization;
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power and authority to execute, deliver and perform its
obligations under the merger agreement;
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the absence of conflicts with, or violations of,
(a) organizational documents, (b) applicable law or
(c) material agreements, indentures or other instruments,
in each case as a result of the merger or entry into the merger
agreement;
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required government filings and consents;
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financial reports and regulatory documents;
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regulatory investigations and orders;
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financial statements, internal controls and absence of
undisclosed liabilities;
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absence of material adverse changes;
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compliance with applicable law;
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legal proceedings;
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tax matters;
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employee matters, including employee benefit plans and labor
matters;
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material contracts;
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intellectual property;
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broker-dealer and investment advisory matters;
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the inapplicability of state takeover laws and Wilmington
Trusts rights agreement;
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real property and leases;
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loan matters;
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insurance;
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derivative instruments and transactions;
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affiliate transactions;
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receipt of a fairness opinion;
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brokers fees; and
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information about Wilmington Trust included in this proxy
statement/prospectus.
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The merger agreement also contains representations and
warranties made by M&T to Wilmington Trust and Merger Sub
relating to a number of matters, including the following:
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corporate matters, including due organization and qualification;
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capitalization;
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power and authority to execute, deliver and perform its
obligations under the merger agreement;
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the absence of conflicts with, or violations of,
(a) organizational documents, (b) applicable law or
(c) material agreements, indentures or other instruments,
in each case as a result of the merger or entry into the merger
agreement;
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required government filings and consents;
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financial reports and regulatory documents;
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financial statements;
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absence of material adverse changes;
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compliance with applicable law;
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legal proceedings;
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information about M&T included in this proxy
statement/prospectus; and
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M&Ts ownership of Wilmington Trust shares prior to
the consummation of the merger.
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The representations and warranties described above and included
in the merger agreement were made by each of M&T and
Wilmington Trust to the other. These representations and
warranties may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk
between the parties to the merger agreement instead of
establishing these matters as facts, and may be subject to
standards of materiality applicable to the contracting parties
that differ from those applicable to investors. In addition,
such representations and warranties (a) will not survive
consummation of the merger and cannot be the basis for any
claims under the merger agreement by the other party after
termination of the merger agreement except as a result of a
knowing breach as of the date of the merger agreement, and
(b) were made only as of the date of the merger agreement
or such other date as is specified in the merger agreement.
Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the
merger agreement, which subsequent information may or may not be
fully reflected in the parties public disclosures.
Accordingly, the merger agreement is included in this proxy
statement/prospectus only to provide investors with information
regarding the terms of the merger agreement, and not to provide
investors with any other factual information regarding the
parties or their respective businesses. The representations and
warranties and other provisions of the merger agreement should
not be read alone, but instead should be read only in
conjunction with the information provided elsewhere in this
proxy statement/prospectus and in the documents incorporated by
reference into this proxy statement/prospectus. See Where
You Can Find More Information on Page 82.
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Covenants
and Agreements
Each of Wilmington Trust and M&T has undertaken customary
covenants that place restrictions on it and its subsidiaries
until the completion of the merger.
Conduct of Business of Wilmington Trust Pending the
Merger. Wilmington Trust has agreed that, prior
to the completion of the merger, it and its subsidiaries will
conduct their respective businesses in the ordinary course of
business consistent with past practice and use reasonable best
efforts to maintain and preserve intact their respective
business organizations and their respective rights,
authorizations, franchises and other authorizations from
governmental entities and advantageous business relationships
and to retain their respective officers and key employees.
Wilmington Trust has also agreed, on behalf of itself and its
subsidiaries, to take no action that would reasonably be
expected to adversely affect or delay the receipt of any
regulatory approvals required to complete the transactions
contemplated by the merger agreement or otherwise delay the
consummation of the transactions contemplated by the merger
agreement.
Wilmington Trust further agreed to consult with M&T
regarding any significant transactions or tax return positions
reasonably expected to materially increase or affect Wilmington
Trusts net operating losses or capital losses for any
taxable year or period and, in Wilmington Trusts
reasonable discretion, take account of M&Ts views to
the extent reasonably feasible, including requests by M&T
that Wilmington Trust or any of its subsidiaries participate in
certain reorganization transactions prior to the completion of
the merger; provided that such reorganization
transactions shall not (a) change the voting powers of the
Wilmington Trust Series A Preferred Stock,
(b) alter or change the amount or kind of the consideration
to be issued to holders of Wilmington Trust common stock or
Wilmington Trust Series A Preferred Stock as merger
consideration or (c) materially impede or delay
consummation of the merger. In addition, Wilmington Trust has
agreed that, with certain exceptions and except with
M&Ts prior written consent, Wilmington Trust will
not, and will not permit any of its subsidiaries to, among other
things, undertake the following actions:
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issue, sell or otherwise permit to become outstanding, or commit
to issue or sell or dispose of or encumber or pledge or
authorize or propose the creation of, any additional shares of
Wilmington Trust stock or other equity interest or securities
convertible into or exchangeable for any additional shares of
capital stock or other equity interest other than pursuant to
rights existing on the date of the merger agreement or issuances
under dividend reinvestment plans or pursuant to the exercise of
the Wilmington Trust Warrant;
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permit any shares of Wilmington Trust stock to become subject to
new grants;
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declare or pay any dividends or other distributions on any
shares of its stock, except as set forth above in
Dividends and Distributions;
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sell, transfer, mortgage, encumber or otherwise dispose of or
discontinue, abandon or fail to maintain, any material rights,
assets, deposits or properties or cancel or release any material
indebtedness or claims, except:
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sales of loans and sales of investment securities in the
ordinary course of business consistent with past practice;
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pledges of assets to secure cash management sweeps in the
ordinary course of business consistent with past practice;
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pledges of assets to secure public deposits accepted in the
ordinary course of business consistent with past
practice; or
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as expressly required by the terms of any specified existing
agreement.
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make any acquisition of or investment in any person or
acquisition of assets of another person, in each case other than
a wholly owned subsidiary of Wilmington Trust, or enter into an
agreement relating to a business combination, liquidation or
similar transaction (other than transactions solely among wholly
owned subsidiaries of Wilmington Trust), or letter of intent or
memorandum of understanding or agreement in principle in respect
thereto, or, except for foreclosures and other similar
transactions in connection with securing or collecting debts
previously contracted, or make any purchase or other
acquisitions of debt
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securities, property or assets, except for transactions in the
ordinary course of business consistent with past practice and
that, together with all other such transactions, do not present
a material risk that the closing of the merger will be
materially delayed or that required regulatory approvals will be
more difficult to obtain;
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amend its articles of incorporation or bylaws or similar
governing documents;
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implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or
applicable regulatory accounting requirements;
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undertake certain actions relating to director, officer or
employee agreements, compensation, benefits, hiring and
promotion and benefit plans;
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other than in the ordinary course of business, incur or
guarantee any indebtedness for borrowed money;
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enter into new lines of business or change in any material
respect its lending, investment, risk and asset-liability
management and other material banking or operating policies
except as required by law or by rules or policies imposed by
governmental entities;
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other than in the ordinary course of business consistent with
past practice, and subject to certain other exceptions, enter
into, renew, extend, terminate or make any material change in
any respect or terminate any lease, license, contract or other
agreement;
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make or commit to make any capital expenditures not provided for
in Wilmington Trusts capital expenditure budget in excess
of $250,000 individually or $2.5 million in the aggregate;
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permit the construction of new structures or facilities upon, or
purchase, or lease any real property, or open, relocate or close
any branch or other facility or make an application to do so;
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settle any claim, action or proceeding involving monetary
damages in excess of $250,000 or, other than in the ordinary
course of business consistent with past practice, waive or
release any material rights or claims or agree or consent to the
issuance of any injunction or order affecting the business or
operations of Wilmington Trust;
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materially change its investment securities portfolio policy or
its policies with respect to the classification or reporting of
such portfolios, or invest in any mortgage-backed or
mortgage-related securities that would be considered
high-risk securities under applicable regulatory
pronouncements;
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except as required by law or applicable regulatory authorities,
make any material change in its policies and practices with
respect to underwriting, pricing, originating, acquiring,
selling, servicing, or buying or selling rights to service,
loans or its hedging practices and policies;
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alter materially its interest rate or fee pricing policies with
respect to depository accounts of any of its subsidiaries or
waive any material fees with respect thereto;
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make, change or revoke any material tax election, change any
material method of tax accounting, adopt or change any taxable
year or period, file any amended material tax returns, agree to
an extension or waiver of any statute of limitations with
respect to the assessment or determination of taxes, settle or
compromise any material tax liability of Wilmington Trust or any
of its subsidiaries, enter into any closing agreement with
respect to any material tax, or surrender any right to claim a
material tax refund;
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knowingly take any action that is reasonably likely to result in
any of the conditions to the consummation of the merger not
being satisfied or materially impair its ability to perform its
obligations under the merger agreement or to consummate the
transactions contemplated by the merger agreement, except as
required by applicable law or the merger agreement;
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enter into any securitizations of any loans or create any
special purpose funding or variable interest entity other than
on behalf of clients;
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without providing prior notice to and consulting with M&T
and except as approved by Wilmington Trust prior to the date of
the merger agreement, make or acquire any loan or issue a
commitment for any loan or amend or modify in any material
respect any existing loan that would result in total credit
exposure to the
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applicable borrower and its affiliates in excess of
$10 million, amend or modify in any material respect any
existing loan rated special mention or below by
Wilmington Trust with total credit exposure in excess of
$5 million or modify or amend any loan in a manner that
would result in any additional extension of credit, principal
forgiveness, or effect any uncompensated release of collateral,
in each case in excess of $1 million; provided that
M&T will respond to any such notice or request for
consultation promptly and in any event within three business
days following any such request that contains all information
that is material to the decision involved, and Wilmington Trust
will take no action prior to the expiration of such three
business day period unless and until it has received
M&Ts response; or
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agree to, or make any commitment to, take any of these
restricted actions.
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Conduct of Business of M&T Pending the
Merger. M&T has agreed that, except with
Wilmington Trusts prior written consent, M&T will
not, and will not permit any of its subsidiaries to:
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amend its organizational documents in a way that would affect
holders of Wilmington Trust common stock or holders of
Wilmington Trust preferred stock adversely relative to other
holders of M&T common stock or the M&T preferred stock
to be issued as consideration for the Wilmington Trust preferred
stock;
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take any action that is reasonably likely to result in any of
the conditions to the consummation of the merger not being
satisfied or materially impair its ability to perform its
obligations under the merger agreement or to consummate the
transactions contemplated by the merger agreement, except as
required by applicable law or policies imposed by any
governmental entity;
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take any action that is intended to or would reasonably be
expected to adversely affect or materially delay the ability of
M&T or Merger Sub to obtain any necessary approvals of any
regulatory agency or other governmental entity required for the
transactions contemplated by the merger agreement or to perform
its covenants and agreements under the merger agreement or
consummate the transactions contemplated under the merger
agreement; or
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agree to take, make any commitment to take, or adopt any
resolutions of its Board of Directors in support of, any of
these restricted actions.
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M&T has also agreed to deliver agreements in a form
reasonably satisfactory to Wilmington Trust, to assume at the
time of the completion of the merger Wilmington Trusts
obligations with respect to the Wilmington
Trust Series A Preferred Stock and the related
securities purchase agreement with the U.S. Department of
the Treasury.
Certain Additional Covenants. The merger
agreement also contains additional covenants, including
covenants relating to the filing of this proxy
statement/prospectus, cooperation regarding filings and
proceedings with governmental and other agencies and
organizations and obtaining required consents, the listing of
M&T common shares to be issued in the merger and the
sharing of certain information regarding Wilmington Trusts
business.
Regulatory Filings. Wilmington Trust and
M&T have also agreed to use commercially reasonable efforts
to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents,
approvals and authorizations of third party and governmental
entities that are necessary or advisable to consummate the
transactions contemplated by the merger agreement. No party will
be required to take any such action, however, if the taking of
such action or of compliance with such permits, consents,
authorizations or approvals is reasonably likely to result in
the imposition of any restriction or condition that, in
M&Ts good faith judgment, would reasonably be
expected to have a material adverse effect on M&T or
Wilmington Trust, measured on a scale relative to Wilmington
Trust.
Wealth
Advisory Services and Corporate Client Services to Be Held
Separate
The parties intend that, following the completion of the merger,
the Wealth Advisory Services and Corporate Client Services
businesses of Wilmington Trust will be held out to
M&Ts clients and potential clients as a distinct line
of business of M&T and division within M&Ts
corporate structure and will continue to contain the substantial
core of Wilmington Trusts Wealth Advisory Services and
Corporate Client Services businesses. M&Ts current
intention is to continue to employ and preserve the trademarks
and brand names related to Wilmington Trusts
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Wealth Advisory Services and Corporate Client Services
businesses, including the Wilmington Trust name and
branding, in a manner consistent with the way they have been
used in the past. M&T further intends that Wilmington,
Delaware will serve as the headquarters for the Wealth Advisory
Services and Corporate Client Services businesses following the
consummation of the merger. M&T currently intends to seek
opportunities to use the Wealth Advisory Services and Corporate
Client Services businesses as a platform for expanding or
enhancing M&Ts existing wealth advisory services and
corporate client services businesses.
Commitments
to the Community
It is M&Ts current intent that, following the
consummation of the merger, it will maintain Wilmington
Trusts strong commitment to charitable giving in the
greater Wilmington, Delaware area and to maintain or increase
the annual level of charitable giving beyond the current levels
of Wilmington Trust in that area. M&T has agreed to honor,
and to cause Wilmington Trust to honor, Wilmington Trusts
obligations to pay in a timely fashion all charitable pledges
and sponsorships of Wilmington Trust and its subsidiaries
outstanding at the time of the execution of the merger agreement.
Wilmington
Trust Stockholder Meeting and Recommendation of Wilmington
Trusts Board of Directors
The merger agreement requires that Wilmington Trust call, give
notice of, convene and hold a meeting of its stockholders for
the purpose of obtaining the vote required to adopt the merger
agreement. The Board of Directors of Wilmington Trust has agreed
to recommend that Wilmington Trusts stockholders vote in
favor of adoption of the merger agreement and to not withdraw,
modify or qualify such recommendation in any manner adverse to
M&T (which we refer to in this document as a change in
Wilmington Trusts recommendation), except that Wilmington
Trusts Board of Directors may effect a change in
Wilmington Trusts recommendation if and only to the extent
that:
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Wilmington Trust has complied in all material respects with its
obligations under the no solicitation covenant of the merger
agreement, which is described below under
Agreement Not to Solicit Other Offers;
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Wilmington Trusts Board of Directors, after consultation
with its outside legal advisors, concludes in good faith that
the failure to effect a change in Wilmington Trusts
recommendation would cause it to violate the Boards
fiduciary duties under applicable law;
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If the change in Wilmington Trusts recommendation is made
after Wilmington Trust has received an alternative transaction
proposal (as described below) from a third party and Wilmington
Trusts Board of Directors has concluded in good faith that
it is or is reasonably likely to constitute a superior proposal
(as described below) after taking into account any amendment or
modifications to the merger agreement agreed to by M&T, and
Wilmington Trust has:
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given at least three business days written notice to
M&T of its intention to effect a change in Wilmington
Trusts recommendation, specifying the material terms and
conditions of the superior proposal, including the identity of
the person making such proposal or inquiry and the material
terms of such proposal, if any; and
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negotiated with M&T in good faith during this period of not
less than three business days to improve the terms of the merger
agreement.
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In the event of any material revisions to the superior proposal,
Wilmington Trust will be required to deliver a new written
notice to M&T two days in advance of its intention to
effect a change in Wilmington Trusts recommendation and to
comply with the other requirements described above during that
two-day
period.
For purposes of the merger agreement,
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an alternative transaction proposal means any
inquiry, proposal or indication of interest (whether binding or
non-binding) to Wilmington Trust or its stockholders with
respect to (a) any transaction or series of related
transactions with one or more third persons involving
(i) any purchase from Wilmington Trust or acquisition
(whether by way of a merger, share exchange, consolidation,
business combination, consolidation or similar transaction) by
any person or group of persons (as defined under
Section 13(d) of the Exchange Act and
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the rules and regulations thereunder) of more than a 15%
interest in the total outstanding voting securities of
Wilmington Trust or any of its subsidiaries or any tender offer
or exchange offer that if consummated would result in any person
or group of persons beneficially owning 15% or more of the total
outstanding voting securities of Wilmington Trust or any of its
subsidiaries or any merger, consolidation, business combination
or similar transaction involving Wilmington Trust or any of its
subsidiaries or (ii) any sale, lease exchange, transfer,
license, acquisition or disposition of more than 15% of the
assets of Wilmington Trust and its subsidiaries, taken as a
whole, or (b) any liquidation or dissolution of Wilmington
Trust; and
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a superior proposal means an unsolicited, bona fide
written alternative transaction proposal made by a third person
(or group of persons acting in concert within the meaning of
Rule 13d-5
under the Exchange Act) to acquire, directly or indirectly,
pursuant to a tender offer, exchange offer, merger,
consolidation or other business combination or acquisition
transaction, (a) all or substantially all of the assets of
Wilmington Trust or (b) more than 50% of the outstanding
voting securities of Wilmington Trust and, which Wilmington
Trusts Board of Directors has in good faith determined
(taking into account, among other things, (i) its
consultation with its outside legal counsel and financial
advisors and (ii) the terms and conditions of such
alternative transaction proposal and the merger agreement (as it
may be proposed to be amended by M&T)):
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to be more favorable, from a financial point of view, to
Wilmington Trusts stockholders than the transactions
contemplated by the merger agreement (as it may be proposed to
be amended by M&T); and
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to be reasonably capable of being consummated on the terms
proposed, taking into account all other legal, financial,
regulatory and other aspects of such alternative transaction
proposal and the person making the proposal.
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Notwithstanding the foregoing, the merger agreement requires
Wilmington Trust to submit the merger agreement and transactions
contemplated thereby to a stockholder vote even if its Board of
Directors no longer recommends approval of the merger agreement
and the transactions contemplated thereby, in which event the
Board may communicate its basis for its lack of a recommendation
to stockholders. Unless the merger agreement has been terminated
as described below under the caption
Termination of the Merger Agreement,
Wilmington Trust may not submit to the vote of stockholders any
acquisition transaction proposal other than the merger agreement
and the transactions contemplated thereby.
Agreement
Not to Solicit Other Offers
Wilmington Trust also has agreed that it and its subsidiaries
will not, and Wilmington Trust will use all reasonable best
efforts to cause its and each of its subsidiaries
directors, officers employees, agents and advisors not to,
directly or indirectly:
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initiate, facilitate, solicit or knowingly encourage any
inquiries or the making or completion of any alternative
transaction proposal;
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provide non-public information in connection with or relating to
an alternative transaction proposal;
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engage in any discussions or negotiations concerning an
alternative transaction proposal;
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approve, recommend, agree to or accept, or propose publicly to
approve, recommend, agree to or accept, any alternative
transaction proposal; or
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approve, endorse or recommend, agree to or accept, or propose to
approve, endorse, recommend, agree to or accept, or execute or
enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other
similar agreement related to any alternative transaction
proposal.
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However, if prior to obtaining the required vote of the
stockholders of Wilmington Trust adopting the merger agreement
Wilmington Trust receives an unsolicited bona fide written
alternative transaction proposal that did not result from or
arise in connection with a breach of Wilmington Trusts
agreements not to solicit other offers described above and that
Wilmington Trusts Board of Directors determines to be, or
in good faith determines constitutes or is reasonably likely to
result in, a superior proposal, Wilmington Trust may engage in
discussions or
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negotiations with, or provide confidential or non-public
information or data to, the person making that alternative
transaction proposal if:
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Wilmington Trusts Board of Directors, after consultation
with its outside legal counsel, concludes in good faith that the
failure to take those actions would cause it to violate the
Boards fiduciary duties under applicable law;
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prior to providing (or causing to be provided) any non-public
information to the person making the inquiry or proposal,
Wilmington Trust receives from such person an executed
confidentiality agreement containing terms at least as
restrictive with respect to such person as the terms contained
in Wilmington Trusts confidentiality agreement with
M&T; and
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Wilmington Trust promptly provides M&T with any non-public
information concerning Wilmington Trust or its subsidiaries
provided to such person that was not previously provided to
M&T.
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Wilmington Trust has agreed to immediately cease and cause to be
terminated any activities, discussions or negotiations conducted
with any third party prior to October 31, 2010 with respect
to any alternative transaction proposal, to request the prompt
return or destruction of all confidential information previously
furnished to any third party that has made or indicated an
intention to make an alternative transaction proposal and not to
waive or amend any standstill provision or provision of similar
effect, except to the extent necessary to permit Wilmington
Trust to take action it is otherwise permitted to take pursuant
to the merger agreement or to the extent that Wilmington Trust
has effected a change in Wilmington Trusts recommendation
in accordance with the terms of the merger agreement with
respect to a proposal by the third party subject to such
standstill provision.
Wilmington Trust also agreed to, as promptly as practicable
(within 24 hours) following the receipt of any alternative
transaction proposal, or request for nonpublic information or
any inquiry that could reasonably be expected to lead to an
alternative transaction proposal, provide M&T with notice
of the material terms and conditions of such alternative
transaction proposal or inquiry, including the identity of the
person making the inquiry or alternative transaction proposal.
In addition, Wilmington Trust has agreed to provide M&T as
promptly as possible with notice setting forth all such
information as is reasonably necessary to keep M&T informed
in all material respects of all communications (including
material amendments or proposed material amendments) regarding
such alternative transaction proposal, request or inquiry.
The merger agreement provides that the above-described
restrictions on Wilmington Trust do not prohibit Wilmington
Trust and its Board of Directors from issuing a stop, look
and listen communication pursuant to
Rule 14d-9(f)
promulgated under the Exchange Act or from taking and disclosing
to Wilmington Trusts stockholders any position
contemplated by
Rules 14d-9
and 14e-2(a)
promulgated under the Exchange Act or from making any disclosure
to Wilmington Trusts stockholders if Wilmington
Trusts Board of Directors (after consultation with its
legal advisors) concludes that its failure to do so would be
inconsistent with its fiduciary duties under applicable law.
Expenses
and Fees
In general, each of M&T and Wilmington Trust will be
responsible for all expenses incurred by it in connection with
the negotiation and completion of the transactions contemplated
by the merger agreement. However, the costs and expenses of
printing and mailing this proxy statement/prospectus will be
borne equally by Wilmington Trust and M&T, and the costs
and expenses of all filing and other fees in connection with any
filing under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976 will be borne by M&T.
Employee
Matters
M&T has agreed to assume and honor all Wilmington Trust
compensation and benefit plans in accordance with their terms
(subject to any amendments or termination required by the merger
agreement or permitted by the terms of the applicable plans). In
addition, for a period of one year following the date of
completion of the merger, Wilmington Trust employees who
continue to be employed by M&T, or covered employees, will
receive base salary, incentive compensation (including equity
compensation), and aggregate other employee benefits that are no
less favorable than those provided to such covered employees
immediately prior to the merger. In addition, for one
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year following the merger, a covered employee who experiences a
severance-qualifying termination will receive severance benefits
that are no less favorable than the severance benefits such
covered employee would have been entitled to immediately prior
to the date of the completion of the merger.
M&T has agreed, to the extent any Wilmington Trust employee
participates in M&T compensation and benefit plans
following the merger, to recognize each such employees
service with Wilmington Trust prior to the completion of the
merger for purposes of eligibility, vesting and benefit accruals
(other than benefit accruals under defined benefit pension plans
or that would result in a duplication of benefits). M&T has
agreed to waive any coverage limitations for pre-existing
conditions and waiting periods under any M&T welfare
benefit plans, to the extent such limitations would have been
waived or satisfied under a corresponding Wilmington Trust plan
and to give credit for any co-payments and deductibles paid
under a corresponding Wilmington Trust welfare benefit plan for
purposes of satisfying any applicable deductible and
out-of-pocket
requirements under any welfare benefit plan of M&T.
The merger agreement also provides that, upon consummation of
the merger, the Board of Directors of M&T will be increased
by one, and Mr. Donald E. Foley, Wilmington Trusts
Chairman of the Board and Chief Executive Officer, will be
appointed as a director of M&T.
Indemnification
and Insurance
The merger agreement requires M&T to indemnify and advance
expenses to present and former directors and officers of
Wilmington Trust and its subsidiaries against any costs or
expenses, judgments, fines, losses, claims, damages, or
liabilities or amounts paid in settlement incurred in connection
with any actual or threatened claim, action, suit, proceeding or
investigation arising out of the fact that such person is or was
a director or officer of Wilmington Trust or any matters arising
out of consummation of the merger, whether asserted or claimed
prior to or following the merger. M&T is also required, to
the fullest extent permitted by law, to maintain in effect for a
period of six years following consummation of the merger all
indemnification provisions under Wilmington Trusts
restated certificate of incorporation or amended and restated
bylaws or specified indemnification agreements in effect on the
date of the merger agreement. The merger agreement also provides
that, for a period of six years after completion of the merger,
M&T will provide directors and officers
liability insurance and fiduciary insurance to reimburse current
and former directors and officers with respect to claims arising
at or prior to the completion of the merger. The insurance will
contain terms and conditions that are not less advantageous than
the current coverage provided by Wilmington Trust, except that
M&T is not required to incur annual premium expense greater
than 300% of Wilmington Trusts current annual
directors and officers liability insurance premium.
In lieu of the insurance described in the preceding sentences,
M&T, or Wilmington Trust in consultation with M&T (for
an aggregate price of no more than 325% of Wilmington
Trusts current annual directors and officers
liability insurance premium), may purchase prepaid or
tail directors and officers liability
insurance coverage equivalent to the coverage described in the
preceding sentences.
Conditions
to Complete the Merger
M&Ts and Wilmington Trusts respective
obligations to complete the merger are subject to the
fulfillment or waiver of certain conditions, including:
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the approval of the merger agreement and the transactions
contemplated thereby by Wilmington Trust common stockholders;
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the absence of any law, statute, code, ordinance, rule,
regulation or judgment issued, promulgated or entered into by
any governmental entity or order, injunction or decree by any
court or agency of competent jurisdiction, which is in effect
and prohibits completion of the merger or the other transactions
contemplated by the merger agreement;
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the receipt of regulatory consents and approvals required from
the Federal Reserve Board, the Office of the State Bank
Commissioner of the State of Delaware and the New York State
Banking Department to consummate the merger and expiration or
termination of all related statutory waiting periods;
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the approval for listing on the New York Stock Exchange of the
M&T common stock to be issued in the merger;
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the effectiveness of the registration statement of which this
proxy statement/prospectus is a part with respect to the
M&T common stock to be issued in the merger under the
Securities Act and the absence of any stop order or proceedings
initiated or threatened by the SEC for that purpose; and/or
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the truth and correctness of the representations and warranties
of each other party in the merger agreement as of the closing
date of the merger, subject to the materiality standards
provided in the merger agreement, and the performance by each
other party in all material respects of their obligations under
the merger agreement (and the receipt by each party of
certificates from the other party to such effects).
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Each of M&Ts and Merger Subs obligations to
complete the merger is also separately subject to the
satisfaction or waiver of the following condition:
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the absence of any action taken or law, rule, regulation or
judgment enacted, entered, enforced or deemed applicable to the
transactions contemplated by the merger agreement, in connection
with the grant of a required regulatory approval or otherwise,
that imposes any restriction or condition that, in
M&Ts good faith judgment, would reasonably be
expected to have a material adverse effect on M&T or on
Wilmington Trust, in each case measured on a scale relative to
Wilmington Trust.
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We cannot provide assurance as to when or if all of the
conditions to the merger can or will be satisfied or waived by
the appropriate party. As of the date of this proxy
statement/prospectus, we have no reason to believe that any of
these conditions will not be satisfied.
Termination
of the Merger Agreement
The merger agreement can be terminated at any time prior to
completion by mutual consent in a written instrument, if
authorized by the Boards of Directors of each of M&T and
Wilmington Trust, or by either party in the following
circumstances:
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if the merger has not been completed by October 31, 2011,
unless the failure to complete the merger by that date is due to
the breach of the merger agreement by the party seeking to
terminate the merger agreement;
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if Wilmington Trusts common stockholders fail to adopt the
merger agreement at the special meeting;
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if the Federal Reserve Board, the Office of the State Bank
Commissioner of the State of Delaware or the New York State
Banking Department has denied approval of the merger and such
denial has become final and non-appealable or any governmental
entity of competent jurisdiction has issued a final and
non-appealable order permanently enjoining or otherwise
prohibiting or making illegal the consummation of the
transactions contemplated by the merger agreement, so long as
the party seeking to terminate the merger agreement pursuant to
this provision has used its reasonable best efforts to contest,
appeal or remove such order, decree or ruling; or
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if the other party breaches the merger agreement in a way that
would entitle the party seeking to terminate the agreement not
to consummate the merger, unless the breach is capable of being
cured (and is cured) within 30 calendar days following receipt
of written notice of such breach, and unless the failure of any
such condition to be satisfied is the result of a material
breach of the merger agreement by the party seeking to terminate.
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In addition, M&T may terminate the merger agreement if:
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Wilmington Trusts Board of Directors (a) effects a
change in Wilmington Trusts recommendation, or otherwise
withdraws, modifies or qualifies (or publicly proposes to
withdraw, modify or qualify) its recommendation in any manner
adverse to M&T or Merger Sub or (b) publicly approves,
endorses or recommends or publicly proposes to approve, endorse
or recommend any alternative transaction proposal; or
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a third party commences a tender offer or exchange offer for 20%
or more of the outstanding shares of Wilmington Trusts
common stock and Wilmington Trusts Board of Directors
recommends that its stockholders tender their shares in such
tender or exchange offer or otherwise fails to recommend that
such stockholders reject such tender offer within 10 business
days.
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65
Effect of Termination. If the merger agreement
is terminated, it will become void, and there will be no
liability on the part of M&T or Wilmington Trust, except
that (a) both M&T and Wilmington Trust will remain
liable for any knowing breach of the merger agreement and
(b) designated provisions of the merger agreement,
including with respect to the payment of fees and expenses and
the confidential treatment of information, will survive the
termination.
Termination
Fee
Wilmington Trust will pay M&T a $30 million
termination fee:
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if M&T terminates the merger agreement because:
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Wilmington Trust has breached or failed to perform its
obligations concerning soliciting alternative transaction
proposals or holding the special meeting described above under
Agreement Not to Solicit Other Offers or
Wilmington Trust Stockholder Meeting and
Recommendation of Wilmington Trusts Board of
Directors;
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Wilmington Trusts Board of Directors has (a) effected
a change in Wilmington Trusts recommendation, or otherwise
withdrawn, modified or qualified (or publicly proposed to
withdraw, modify or qualify) its recommendation in any manner
adverse to M&T or Merger Sub or (b) publicly approved,
endorsed or recommended or publicly proposed to approve, endorse
or recommend any alternative transaction proposal; or
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Wilmington Trusts Board of Directors has recommended that
its stockholders tender their shares in a tender offer or
exchange offer for 20% or more of the outstanding shares of
Wilmington Trusts common stock commenced by a third party
or otherwise failed to recommend that such stockholders reject
such tender offer within 10 business days;
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or
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if an alternative transaction proposal with respect to 50% of
Wilmington Trusts voting securities or assets or has been
made or proposed to Wilmington Trust or its stockholders, which
proposal has been publicly disclosed and not withdrawn, or any
person has publicly announced an intention to make an
alternative transaction proposal, the merger agreement is
terminated as a result of (i) a breach by Wilmington Trust
that gives rise to the failure of a condition to completion of
the merger; (ii) a failure to obtain stockholder approval;
or (iii) a failure to consummate the merger by
October 31, 2011 without stockholder approval having been
obtained; and, in any such case, Wilmington Trust enters into a
definitive agreement with respect to or consummates an
alternative transaction proposal within nine months following
such termination.
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Wilmington Trust will in no event be required to pay the
termination fee on more than one occasion.
Amendment,
Waiver and Extension of the Merger Agreement
Subject to applicable law, the parties may amend the merger
agreement by written agreement. At any time prior to the
completion of the merger, each of M&T and Wilmington Trust,
to the extent legally allowed, may extend the time for
performance of any obligations or acts of the other party, waive
any inaccuracies in the representations and warranties contained
in the merger agreement or waive compliance with any of the
agreements or conditions contained in the merger agreement.
ACCOUNTING
TREATMENT
The merger will be accounted for as a business
combination, as that term is used under generally accepted
accounting principles, for accounting and financial reporting
purposes, with M&T treated as the acquirer. Under the
acquisition method of accounting, the assets (including
identifiable intangible assets) and liabilities (including
executory contracts and other commitments) of Wilmington Trust
as of the effective time of the merger will be recorded at their
respective fair values and added to those of M&T. Any
excess of purchase price over the fair values is recorded as
goodwill. Consolidated financial statements of M&T issued
after the merger would reflect these fair
66
values and would not be restated retroactively to reflect the
historical financial position or results of operations of
Wilmington Trust.
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER
The following general discussion sets forth certain material
United States federal income tax consequences of the merger to
U.S. holders (as defined below) of Wilmington Trust common
stock that exchange their shares of Wilmington Trust common
stock for shares of M&T common stock in the merger. This
discussion does not address any tax consequences arising under
the laws of any state, local or foreign jurisdiction, or under
any United States federal laws other than those pertaining to
income tax. This discussion is based upon the Internal Revenue
Code of 1986, as amended, which we refer to as the Code, the
regulations promulgated under the Code and court and
administrative rulings and decisions, all as in effect on the
date of this proxy statement/prospectus. These laws may change,
possibly retroactively, and any change could affect the accuracy
of the statements and conclusions set forth in this discussion.
This discussion addresses only those Wilmington Trust common
stockholders that hold their shares of Wilmington Trust common
stock as a capital asset within the meaning of Section 1221
of the Code (generally, property held for investment). Further,
this discussion does not address all aspects of United States
federal income taxation that may be relevant to you in light of
your particular circumstances or that may be applicable to you
if you are subject to special treatment under the United States
federal income tax laws, including if you are:
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a financial institution;
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a tax-exempt organization;
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an S corporation or other pass-through entity (or an
investor in an S corporation or other pass-through entity);
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an insurance company;
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a mutual fund;
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a dealer or broker in stocks and securities, or currencies;
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a trader in securities that elects
mark-to-market
treatment;
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a holder of Wilmington Trust common stock subject to the
alternative minimum tax provisions of the Code;
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a holder of Wilmington Trust common stock that received
Wilmington Trust common stock through the exercise of an
employee stock option, through a tax qualified retirement plan
or otherwise as compensation;
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a person that is not a U.S. holder (as defined below);
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a person that has a functional currency other than the
U.S. dollar;
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a holder of Wilmington Trust common stock that holds Wilmington
Trust common stock as part of a hedge, straddle, constructive
sale, conversion or other integrated transaction; or
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a United States expatriate.
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Determining the actual tax consequences of the merger to you may
be complex. They will depend on your specific situation and on
factors that are not within our control. You should consult with
your own tax advisor as to the tax consequences of the merger in
your particular circumstances, including the applicability and
effect of the alternative minimum tax and any state, local,
foreign or other tax laws and of changes in those laws.
For purposes of this discussion, the term
U.S. holder means a beneficial owner of
Wilmington Trust common stock that is for United States federal
income tax purposes (i) an individual citizen or resident
of the United States, (ii) a corporation, or entity treated
as a corporation, organized in or under the laws of the United
States or any state thereof or the District of Columbia,
(iii) a trust if (a) a court within the United States
is able to exercise primary supervision over the administration
of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust or
(b) such trust has made a valid election to be treated as a
U.S. person for
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U.S. federal income tax purposes or (iv) an estate,
the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its source.
The United States federal income tax consequences to a partner
in an entity or arrangement treated as a partnership, for United
States federal income tax purposes, that holds Wilmington Trust
common stock generally, will depend on the status of the partner
and the activities of the partnership. Partners in a partnership
holding Wilmington Trust common stock should consult their own
tax advisors.
Tax
Consequences of the Merger Generally
The receipt of M&T common stock and cash in lieu of
fractional shares of M&T stock, if any, in exchange for
Wilmington Trust common stock in the merger will generally be a
taxable transaction. In general, a U.S. holder whose shares
of Wilmington Trust common stock are converted into the right to
receive M&T common stock and such cash, if any, in the
merger will recognize capital gain or loss for U.S. federal
income tax purposes in an amount equal to the difference, if
any, between (i) the sum of the value of the M&T
common stock on the Closing Date plus the amount of any cash
received in lieu of fractional shares of M&T common stock
and (ii) such U.S. holders adjusted tax basis in
the shares of Wilmington Trust common stock surrendered in
exchange therefor in the merger. Gain or loss, as well as the
holding period, will be determined separately for each block of
shares of Wilmington Trust common stock (i.e., shares
acquired at the same cost in a single transaction) surrendered
pursuant to the merger. Such gain or loss will be long-term
capital gain or loss provided that a U.S. holders
holding period for such shares is more than one year at the time
of the consummation of the merger. The deductibility of capital
losses is subject to certain limitations.
Backup
Withholding
If you are a non-corporate holder of Wilmington Trust common
stock you may be subject to information reporting and backup
withholding (currently at a rate of 28%, and under current law
at a rate of 31% for payments on or after January 1,
2011) on any cash payments you receive. You generally will
not be subject to backup withholding, however, if you:
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furnish a correct taxpayer identification number, certify that
you are not subject to backup withholding on IRS
Form W-9
or a successor form and otherwise comply with all the applicable
requirements of the backup withholding rules; or
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provide proof that you are otherwise exempt from backup
withholding.
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Any amounts withheld under the backup withholding rules will
generally be allowed as a refund or credit against your United
States federal income tax liability, provided you timely furnish
the required information to the Internal Revenue Service.
This summary of certain material United States federal income
tax consequences is for general information only and is not tax
advice. Holders are urged to consult their tax advisors with
respect to the application of United States federal income tax
laws to their particular situation as well as any tax
consequences arising under the United States federal estate or
gift tax rules, or under the laws of any state, local, foreign
or other taxing jurisdiction or under any applicable tax
treaty.
68
COMPARATIVE
MARKET PRICES AND DIVIDENDS
M&T
M&T common stock is traded on the NYSE under the symbol
MTB. The following table sets forth the high and low
reported
intra-day
sales prices per share of M&T common stock as reported by
the NYSE and the cash dividends declared per share for the
periods indicated.
Wilmington
Trust
Wilmington Trust common stock is traded on the NYSE under the
symbol WL. The following table sets forth the high
and low reported
intra-day
sales prices per share of Wilmington Trust common stock as
reported by the NYSE and the cash dividends declared per share
for the periods indicated.
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M&T (MTB)
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Wilmington Trust (WL)
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High
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Low
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Dividends
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High
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Low
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Dividends
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2011 Quarters
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First (through February 9, 2011)
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$
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89.93
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$
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84.63
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$
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4.54
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$
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4.27
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2010 Quarters
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Fourth
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$
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87.87
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$
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72.03
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$
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0.70
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$
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9.64
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$
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3.88
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$
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0.00
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Third
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95.00
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81.08
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0.70
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12.78
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8.35
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0.01
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Second
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96.15
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74.11
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0.70
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20.23
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10.72
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0.01
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First
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85.00
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66.32
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0.70
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17.03
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11.71
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0.01
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2009 Quarters
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Fourth
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$
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69.89
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$
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59.09
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$
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0.70
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$
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15.90
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$
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11.45
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$
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0.01
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Third
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67.46
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50.33
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0.70
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15.82
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9.75
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0.01
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Second
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61.87
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43.50
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0.70
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18.66
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9.03
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0.17
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First
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59.08
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29.11
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0.70
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22.53
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6.76
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0.17
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2008 Quarters
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Fourth
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$
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99.50
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$
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52.20
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$
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0.70
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$
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31.07
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$
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19.49
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$
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0.35
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Third
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108.53
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53.61
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0.70
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46.75
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20.50
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0.35
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Second
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98.38
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69.90
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0.70
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35.17
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26.26
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0.35
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First
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94.03
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70.49
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0.70
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35.50
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27.78
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0.34
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On October 29, 2010, the trading day used to calculate the
exchange ratio, and the last full trading day before the public
announcement of the merger agreement, the high and low sales
prices of shares of M&T common stock as reported on the
NYSE were $74.82 and $73.49, respectively. On February 9,
2011, the last practicable trading day before the date of this
proxy statement/prospectus, the high and low sale prices of
shares of M&T common stock as reported on the NYSE were
$89.93 and $88.11, respectively.
On October 29, 2010, the trading day used to calculate the
exchange ratio, and the last full trading day before the public
announcement of the merger agreement, the high and low sales
prices of shares of Wilmington Trust common stock as reported on
the NYSE were $7.59 and $7.09, respectively. On February 9,
2011, the last practicable trading day before the date of this
proxy statement/prospectus, the high and low sale prices of
shares of Wilmington Trust common stock as reported on the NYSE
were $4.54 and $4.41, respectively.
As of February 9, 2011, the last date prior to printing
this proxy statement/prospectus for which it was practicable to
obtain this information, there were approximately 12,713
registered holders of M&T common stock and approximately
7,323 registered holders of Wilmington Trust common stock.
Past price performance is not necessarily indicative of likely
future performance. Because market prices of M&T and
Wilmington Trust common stock will fluctuate, you are urged to
obtain current market prices for shares of M&T and
Wilmington Trust common stock. The market price of M&T
common stock and Wilmington Trust common stock will fluctuate
between the date of this proxy statement/prospectus and the
effective date of the
69
merger. No assurance can be given concerning the market price of
M&T common stock or Wilmington Trust common stock before or
after the effective date of the merger. M&T may repurchase
shares of its common stock in accordance with applicable legal
guidelines. The actual amount of shares repurchased will depend
on various factors, including: market conditions; legal
limitations and considerations affecting the amount and timing
of repurchase activity; the companys capital position;
internal capital generation; and alternative potential
investment opportunities. Federal law prohibits M&T from
purchasing shares of its common stock from the date this proxy
statement/prospectus is first disseminated to stockholders until
completion of the special meeting of common stockholders.
Certain other restrictions on M&Ts repurchase of
shares of its common stock apply as a result of M&Ts
participation in the TARP Capital Purchase Program.
M&Ts timing, payment and amount of dividends (when,
as and if declared by M&Ts Board of Directors out of
funds legally available) remain subject to determination by
M&Ts Board of Directors. M&T has previously paid
regular quarterly cash dividends of $0.70 per share. In the
ordinary course of business, M&T is dependent upon
dividends from its subsidiaries, M&T Bank, and M&T
Bank, National Association to provide funds for the payment of
dividends to stockholders and to provide for other cash
requirements. Banking regulations may limit the amount of
dividends that may be paid. Under applicable banking law, the
total of all dividends declared in any calendar year by each of
M&T Bank and M&T Bank, National Association may not,
without applicable regulatory approvals, exceed the aggregate of
such banks net income and retained net income for the
current year and the preceding two years.
Under Federal Reserve Board regulations, the Federal Reserve
Board has the authority to prohibit bank holding companies from
engaging in activities that the Federal Reserve Board considers
unsafe or unsound banking practices. Under certain
circumstances, the Federal Reserve Board may take the position
that payment of dividends by M&T would constitute an unsafe
or unsound banking practice in light of its financial condition.
Under Federal Reserve Board policies, a bank holding company
should pay cash dividends on its common stock only out of income
available over the past year and should not pay cash dividends
if such payment would undermine its ability to serve as a source
of strength to its banking subsidiaries. M&Ts ability
to pay cash dividends is further limited by its obligation to
maintain adequate levels of capital in accordance with the
Federal Reserve Boards capital adequacy guidelines.
In addition, M&Ts agreements with the
U.S. Department of the Treasury with respect to
M&Ts participation in the TARP Capital Purchase
Program contain limitations on certain actions of M&T,
including, but not limited to, the payment of cash dividends on
M&T common stock in excess of the current quarterly cash
dividend of $0.70 per share and the repurchase of M&T
common stock during the first three years, unless all of
M&Ts Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, par value $1.00 per share and liquidation
preference of $1,000 per share, which we refer to as the
M&T Series A Preferred Stock, and Fixed Rate
Cumulative Perpetual Preferred Stock, Series C, which we
refer to as the M&T Series C Preferred Stock, par
value $1.00 per share and liquidation preference of $1,000 per
share, have been redeemed or transferred to third parties or the
U.S. Department of the Treasury otherwise consents.
In the period before completion of the merger, Wilmington Trust
is permitted by the merger agreement, subject to applicable law
and regulatory requirements, including the restrictions under
the TARP Capital Purchase Program discussed above, to continue
to pay regular quarterly cash dividends on its common stock
consistent with its recent practices. Dividends remain subject
to determination by Wilmington Trusts Board of Directors
(including as to timing and amount), applicable law, contractual
restrictions including the terms of its preferred stock and the
availability of funds, and cash dividends to holders of the
Wilmington Trust Series A Preferred Stock in
accordance with the provisions of its restated certificate of
incorporation governing such stock.
The payment, timing and amount of dividends by M&T or
Wilmington Trust on their common stock in the future, either
before or after the merger is completed, are subject to the
determination of each companys respective Board of
Directors and depend on cash requirements, contractual
restrictions, its financial condition and earnings, legal and
regulatory considerations and other factors.
70
INFORMATION
ABOUT THE COMPANIES
M&T
M&T is a New York business corporation which is registered
as a bank holding company under the Bank Holding Company Act and
under
Article III-A
of the New York Banking Law. M&T was incorporated in
November 1969. As of September 30, 2010, M&T and its
subsidiaries had consolidated total assets of approximately
$68.2 billion, deposits of approximately $48.7 billion
and stockholders equity of approximately
$8.2 billion. M&T had 12,837 full-time-equivalent
employees at September 30, 2010.
M&Ts wholly owned bank subsidiaries are M&T Bank
and M&T Bank, National Association. The banks collectively
offer a wide range of commercial banking, trust and investment
services to their customers. As of September 30, 2010,
M&T Bank represented approximately 98% of the consolidated
assets of M&T. M&T Bank is a banking corporation
incorporated and chartered under New York law. As a commercial
bank, M&T Bank offers a broad range of financial services
to a diverse base of consumers, businesses, professional
clients, governmental entities and financial institutions
located in its markets. M&T Bank operates retail and
commercial bank branches in New York, Pennsylvania, Maryland,
Virginia, West Virginia, Delaware, New Jersey, the District of
Columbia and Ontario, Canada.
M&T regularly evaluates merger and acquisition
opportunities and conducts due diligence activities related to
possible transactions with other financial institutions and
financial services companies. As a result, merger or acquisition
discussions and, in some cases, negotiations may take place and
future mergers or acquisitions involving cash, debt or equity
securities may occur. Acquisitions may involve the payment of a
premium over book and market value, and, therefore, some
dilution of M&Ts tangible book value and net income
per common share may occur in connection with any future
transaction.
M&Ts principal executive offices are located at One
M&T Plaza, Buffalo, New York 14203.
Merger
Sub
MTB One, Inc., which we refer to herein as Merger Sub, is a
Delaware corporation and newly formed wholly owned subsidiary of
M&T. Merger Sub was formed by M&T in connection with
and for the purposes of the merger.
Merger Subs principal executive offices are located at One
M&T Plaza, Buffalo, New York 14203.
Wilmington
Trust
Wilmington Trust is a Delaware corporation and financial holding
company under the Bank Holding Company Act. As of
September 30, 2010, Wilmington Trust had approximately
$10.4 billion in total assets, deposits of approximately
$8.3 billion and stockholders equity of approximately
$1.1 billion. Wilmington Trust had
2,796 full-time-equivalent staff members at
September 30, 2010.
Wilmington Trust is a financial holding company that provides
regional banking services throughout the mid-Atlantic region,
and, as of September 30, 2010, Wealth Advisory Services to
high-net-worth
clients in 33 countries, and Corporate Client Services to
institutional clients in 86 countries. Its principal subsidiary,
Wilmington Trust Company, a Delaware-chartered bank and
trust company founded in 1903, is one of the largest personal
trust providers in the United States and the leading retail and
commercial bank in Delaware. Wilmington Trust also owns
Wilmington Trust FSB, a federally-charted savings bank.
Wilmington Trust and its affiliates have offices in Arizona,
California, Connecticut, Delaware, Florida, Georgia, Maryland,
Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New
York, Pennsylvania, South Carolina, Vermont, the Cayman Islands,
the Channel Islands, London, Dublin, Frankfurt, Luxembourg and
Amsterdam.
Wilmington Trusts principal executive offices are located
at 1100 North Market Street, Wilmington, Delaware 19890.
71
DESCRIPTION
OF M&T CAPITAL STOCK
As a result of the merger, Wilmington Trust common
stockholders who receive shares of M&T common stock in the
merger will become stockholders of M&T. Your rights as
stockholders of M&T will be governed by New York law and
the restated certificate of incorporation and the amended and
restated bylaws of M&T. The following description of the
material terms of M&Ts capital stock, including the
common stock to be issued in the merger, reflects the
anticipated state of affairs upon completion of the merger. We
urge you to read the applicable provisions of New York law,
M&Ts restated certificate of incorporation and
amended and restated bylaws and federal law governing bank
holding companies carefully and in their entirety.
General
M&Ts authorized capital stock consists of
250,000,000 shares of common stock, par value $0.50 per
share and 1,000,000 shares of preferred stock, par value
$1.00 per share. As of the record date, there were
120,229,528 shares of M&T common stock outstanding. As
of the record date, there were 600,000 shares of M&T
Series A Preferred Stock outstanding (held by the
U.S. Department of the Treasury in connection with
M&Ts participation in the TARP Capital Purchase
Program). As of the record date, there were 26,500 shares
of M&Ts Mandatory Convertible Non-Cumulative
Preferred Stock, Series B, par value $1.00 per share and
liquidation preference of $1,000 per share, which we refer to as
the M&T Series B Preferred Stock outstanding. As of
the record date, there were 151,500 shares of M&T
Series C Preferred Stock outstanding (held by the
U.S. Department of the Treasury in connection with
Provident Bankshares Corporations, or Providents,
participation in the TARP Capital Purchase Program and issued by
M&T in connection with its acquisition of Provident on
May 23, 2009).
The U.S. Department of the Treasury also holds a ten-year
warrant, which we refer to as the M&T Warrant, to purchase
up to 1,218,522 shares of M&T common stock, at an
initial exercise price of $73.86 per share, subject to certain
anti-dilution and other adjustments. In connection with its
acquisition of Provident, M&T assumed the warrant issued by
Provident to the U.S. Department of the Treasury on
November 14, 2008, which we refer to as the Provident
Warrant. The Provident Warrant provides for the purchase of up
to 407,542 shares of M&T common stock, at an initial
exercise price of $55.76 per share, subject to certain
anti-dilution and other adjustments. In addition, as of the
record date, 10,478,110 shares of M&T common stock
were reserved for issuance upon conversion or exercise of
outstanding stock options and awards.
Because M&T is a holding company, the rights of M&T to
participate in any distribution of assets of any subsidiary upon
its liquidation or reorganization or otherwise (and thus the
ability of M&Ts stockholders to benefit indirectly
from such distribution) would be subject to the prior claims of
creditors of that subsidiary, except to the extent that M&T
itself may be a creditor of that subsidiary with recognized
claims. Claims on M&Ts subsidiaries by creditors
other than M&T will include substantial obligations with
respect to deposit liabilities and purchased funds.
Preferred
Stock
The M&T Board of Directors is authorized to divide the
preferred stock into series and to fix and determine the
relative rights and preferences of the shares of any series and
to provide for the issuance of the preferred stock. If and when
any further M&T preferred stock is issued, the holders of
M&T preferred stock may have a preference over holders of
M&T common stock in the payment of dividends, upon
liquidation of M&T, in respect of voting rights and in the
redemption of the capital stock of M&T.
Fixed Rate Cumulative Perpetual Preferred Stock,
Series A. On December 19, 2008,
M&T filed with the New York State Department of State a
Certificate of Amendment to Certificate of Incorporation for the
purpose of fixing the designations, preferences, limitations and
relative rights of the M&T Series A Preferred Stock in
connection with M&Ts participation in the TARP
Capital Purchase Program. On December 23, 2008, M&T
issued the M&T Series A Preferred Stock to the
U.S. Department of the Treasury; agreements entered into in
connection with the issuance grant the holders of the M&T
Series A Preferred Stock, the M&T Warrant and the
M&T common stock to be issued under the M&T Warrant
certain registration rights.
72
The terms of the M&T Series A Preferred Stock provide
that holders of the M&T Series A Preferred Stock are
entitled to, as and when declared by the Board of Directors,
cumulative cash dividends at a rate per annum equal to 5% per
annum until February 14, 2014 or 9% per annum after
February 14, 2014, payable quarterly in arrears. No
dividends may be paid on M&Ts common stock or other
junior stock unless all the accrued and unpaid dividends for all
past dividend periods, including the latest dividend period,
have been paid in full on the M&T Series A Preferred
Stock. The Series A Preferred Stock is redeemable by
M&T, subject to approval of the appropriate federal banking
agency, in whole or in part, at a redemption price equal to the
sum of the liquidation amount per share and any accrued and
unpaid dividends to but excluding the redemption date.
Holders of the M&T Series A Preferred Stock have no
voting rights except in limited circumstances, including with
respect to the election of two directors, whose seats are
automatically added to the then-current Board, in certain
circumstances where dividends have not been paid for six
quarterly dividend periods or more, and with respect to creating
or authorizing shares of classes of stock senior to the M&T
Series A Preferred Stock, amending the certificate of
incorporation of M&T so as to adversely affect the rights,
preferences, privileges or voting powers of the M&T
Series A Preferred Stock, or consummating a binding share
exchange or reclassification involving the M&T
Series A Preferred Stock or a merger or consolidation of
M&T unless the M&T Series A Preferred Stock
remains outstanding or is exchanged for preferred stock with
rights, preferences, privileges and voting powers, taken as a
whole, that are not materially less favorable to the holders as
compared to immediately prior to such transaction.
Holders of M&T Series A Preferred Stock shares have no
rights to exchange or convert such shares into any other
securities.
Mandatory Convertible Non-Cumulative Preferred Stock,
Series B. In connection with M&Ts
acquisition of Provident, on May 22, 2009, M&T filed
with the New York State Department of State a Certificate of
Amendment to Certificate of Incorporation for the purpose of
fixing the designations, preferences, limitations and relative
rights of a new series of Mandatory Convertible Non-Cumulative
Preferred Stock, Series B, par value $1.00 per share and
liquidation preference of $1,000 per share, which we refer to as
the M&T Series B Preferred Stock. Upon the completion
of the Provident acquisition, under the terms of the merger
agreement, each share of then-outstanding Provident
Series A Preferred Stock was exchanged for one share of
M&T Series B Preferred Stock.
The terms of the M&T Series B Preferred Stock provide
that on April 1, 2011 each share of M&T Series B
Preferred Stock will automatically convert (unless previously
converted at the option of the holders) into a number of shares
of M&T common stock equivalent to the conversion rate of
16.345222, subject to certain anti-dilution adjustments. Holders
may elect to convert at any time prior to that date by written
notice to M&T. The M&T Series B Preferred Stock
will pay non-cumulative dividends in cash, when declared by the
M&T Board of Directors, at a rate of 10.0% per annum on the
liquidation preference of $1,000 per share, payable quarterly in
arrears. In the event that M&T increases its quarterly
dividend on its common stock above $0.9614, the holders of the
M&T Series B Preferred Stock will be entitled to an
additional dividend at a rate per annum equal to the percentage
increase above $0.961 multiplied by 10.0%. No dividends may be
paid on M&Ts common stock or other junior stock
unless dividends have been paid in full on the M&T
Series B Preferred Stock. The M&T Series B
Preferred Stock ranks on a parity with the M&T
Series A Preferred Stock and the M&T Series C
Preferred Stock with respect to dividend and liquidation rights.
M&T Series B Preferred Stock is not redeemable.
Holders of the M&T Series B Preferred Stock will have
no voting rights, except in limited circumstances, including
with respect to any amendment, whether by merger, consolidation,
combination, reclassification or otherwise, of any provisions of
the certificate of incorporation of M&T so as to adversely
affect the holders of the M&T Series B Preferred
Stock, including, without limitation, the creation, issuance or
increase in the authorized number of shares of any class or
series of senior stock.
Fixed Rate Cumulative Perpetual Preferred Stock,
Series C. In connection with M&Ts
acquisition of Provident, on May 22, 2009, M&T filed
with the New York State Department of State a Certificate of
Amendment to Certificate of Incorporation for the purpose of
fixing the designations, preferences, limitations and relative
rights of the M&T Series C Preferred Stock. Upon the
completion of the merger with Provident, under the terms of the
merger agreement, each share of the Provident Series B
Preferred Stock was exchanged for one share of M&T
Series C Preferred Stock. The Provident Series B
Preferred Stock was issued to the U.S. Department of the
Treasury
73
in connection with Providents participation in the TARP
Capital Purchase Program. M&T also succeeded to the rights
and obligations of Provident in the agreement with the
U.S. Department of the Treasury, including the Provident
Warrant.
The terms of the M&T Series C Preferred Stock provide
that holders of the M&T Series C Preferred Stock are
entitled to, as and when declared by the Board of Directors,
cumulative cash dividends at a rate per annum equal to 5% per
annum until November 14, 2013 or 9% per annum after
November 14, 2013, payable quarterly in arrears. No
dividends may be paid on M&Ts common stock or other
junior stock unless all the accrued and unpaid dividends for all
the past dividend periods, including the latest dividend period,
have been paid in full on the M&T Series C Preferred
Stock. The M&T Series C Preferred Stock is redeemable
by M&T, subject to approval of the appropriate federal
banking agency, in whole or in part, at a redemption price equal
to the sum of the liquidation amount per share and any
accrued and unpaid dividends to but excluding the redemption
date.
Holders of the M&T Series C Preferred Stock will have
no voting rights except in limited circumstances, including with
respect to the election of two directors, whose seats are
automatically added to the then-current Board, in certain
circumstances where dividends have not been paid for six
quarterly dividend periods or more and with respect to creating
or authorizing shares of classes of stock senior to the M&T
Series A Preferred Stock, amending the certificate of
incorporation of M&T so as to adversely affect the rights,
preferences, privileges or voting powers of the M&T
Series C Preferred Stock, or consummating a binding share
exchange or reclassification involving the M&T
Series C Preferred Stock or a merger or consolidation of
M&T unless the M&T Series C Preferred Stock
remains outstanding or is exchanged for preferred stock with
rights, preferences, privileges and voting powers, taken as a
whole, that are not materially less favorable to the holders as
compared to immediately prior to such transaction.
Holders of M&T Series C Preferred Stock shares have no
rights to exchange or convert such shares into any other
securities.
Common
Stock
The holders of M&T common stock are entitled to share
ratably in dividends when and if declared by the M&T Board
of Directors from funds legally available for the dividends. In
the event of liquidation, dissolution or
winding-up
of M&T, whether voluntary or involuntary, the holders of
M&T common stock will be entitled to share ratably in any
of its assets or funds that are available for distribution to
its stockholders after the satisfaction of its liabilities (or
after adequate provision is made therefor) and after preferences
of any outstanding M&T preferred stock. M&T common
stock is neither redeemable nor convertible into another
security of M&T.
Each holder of M&T common stock has one vote for each share
held on matters presented for consideration by the stockholders.
Holders of common stock do not have cumulative voting rights.
Each director of M&T is elected at an annual meeting of
stockholders or at any meeting of stockholders held in lieu of
such annual meeting and holds office until the next annual
meeting and until his or her successor has been elected and
qualified.
The holders of M&T common stock have no preemptive rights
to acquire any additional shares of M&T common stock.
M&T common stock is listed on the NYSE, which requires
stockholder approval of the issuance of additional shares of
M&T common stock under certain circumstances.
For more information regarding the rights of holders of M&T
common stock, please see the description captioned
Comparison of Common Stockholder Rights, commencing
on Page 75.
74
COMPARISON
OF COMMON STOCKHOLDER RIGHTS
The rights of M&T stockholders are governed by the New
York Business Corporation Law, or NYBCL, and M&Ts
restated certificate of incorporation and amended and restated
bylaws. The rights of Wilmington Trust stockholders are governed
by the Delaware General Corporation Law, or DGCL, and Wilmington
Trusts restated certificate of incorporation and amended
and restated bylaws. After the merger, the rights of Wilmington
Trusts common stockholders that receive M&T shares
will be governed by the NYBCL and M&Ts restated
certificate of incorporation and amended and restated bylaws.
The following discussion summarizes the material differences
between the rights of Wilmington Trust common stockholders and
the rights of M&Ts common stockholders. We urge you
to read M&Ts restated certificate of incorporation,
M&Ts amended and restated bylaws, Wilmington
Trusts restated certificate of incorporation, Wilmington
Trusts amended and restated bylaws, and the NYBCL, the
DGCL and federal law governing bank holding companies carefully
and in their entirety.
Authorized
Capital Stock
M&T. M&Ts restated certificate
of incorporation authorizes it to issue up to
250,000,000 shares of common stock, par value $0.50 per
share, and 1,000,000 shares of preferred stock, par value
$1.00 per share. As of the record date, there were
120,229,528 shares of M&T common stock outstanding and
778,000 shares of M&T Preferred Stock outstanding.
Wilmington Trust. Wilmington Trusts
restated certificate of incorporation authorizes Wilmington
Trust to issue up to 150,000,000 shares of common stock,
par value $1.00 per share, and 1,000,000 shares of
preferred stock, par value $1.00 per share. As of the record
date, there were 91,423,333 shares of Wilmington Trust
common stock outstanding and 330,000 shares of Wilmington
Trust preferred stock outstanding.
Size of
Board of Directors
M&T. M&Ts amended and restated
bylaws provide that its Board of Directors shall consist of at
least three directors, unless all of its shares are owned by
fewer than three stockholders in which case the Board must
consist of at least as many directors as number of stockholders.
The exact number of directors may be determined from time to
time by action of stockholders or by a majority of the entire
M&T Board of Directors. The M&T Board of Directors
currently has 16 directors. The merger agreement provides
that, upon consummation of the merger, the Board of Directors of
M&T will be increased by one, and Mr. Donald E. Foley,
Wilmington Trusts Chairman of the Board and Chief
Executive Officer, will be appointed as a director of M&T.
Wilmington Trust. Wilmington Trusts
restated certificate of incorporation provides that its Board of
Directors shall consist of not less than one nor more than
25 directors. The exact number of directors may be fixed
from time to time by a resolution passed by a majority of the
Board of Directors. Wilmington Trusts amended and restated
bylaws provide that no more than two directors may also be
Wilmington Trust employees. During any period in which the
holders of any series of Wilmington Trust preferred stock have
the right to elect additional directors, the total authorized
number of directors will automatically increase by the number of
directors, if any, that any series of preferred stock is
entitled to elect. Wilmington Trusts Board of Directors
currently has eight directors.
Classes
of Directors
M&T. M&Ts Board of Directors
is not classified. M&Ts amended and restated bylaws
provide that each director is elected annually.
Wilmington Trust. Wilmington Trusts
Board of Directors is classified. Wilmington Trusts
restated certificate of incorporation provides that the
directors (other than directors, if any, elected by the holders
of any series of preferred stock) are divided into three
classes, as nearly equal in number as possible, with each class
of directors serving for successive three-year terms so that
each year the term of only one class of directors expires.
75
Removal
of Directors
M&T. M&Ts amended and restated
bylaws provide that any M&T director may be removed for
cause either by a vote of stockholders at a meeting or by
three-fourths of the entire Board at a meeting. Any director may
be removed without cause by a vote of a majority of shares
entitled to vote.
Wilmington Trust. Wilmington Trusts
restated certificate of incorporation provides that directors,
except for directors separately elected by holders of preferred
shares, if any, may only be removed for cause and then only by
the affirmative vote of the holders of 75% or more of the
combined voting power of the then-outstanding shares of voting
stock at a stockholder meeting called for that purpose, with all
shares voting together as a single class.
Filling
Vacancies on the Board of Directors
M&T. Under M&Ts amended and
restated bylaws, vacancies created by any reason other than
removal of directors may be filled by a majority of the
directors then in office, whether or not a quorum exists.
Vacancies created by reason of removal of directors may be
filled by vote of stockholders at a meeting. Each director
filling a vacancy shall remain in office for the remainder of
the unexpired term. M&T stockholders are not entitled to
cumulative voting rights in the election of directors.
Wilmington Trust. Under Wilmington
Trusts restated certificate of incorporation, newly
created directorships and vacancies may only be filled by the
affirmative vote of a majority of the remaining directors,
whether or not a quorum exists. Any director elected to fill a
new directorship or vacancy will hold office for the remainder
of the full term of the class of directors in which the new
directorship was created or in which the vacancy occurred, and
until such directors successor has been duly elected and
qualified. Wilmington Trust stockholders are not entitled to
cumulative voting rights in the election of directors.
Nomination
of Director Candidates by Stockholders
M&T. Pursuant to M&Ts
Nomination, Compensation and Governance Committee charter, the
Nomination, Compensation and Governance Committee considers
nominees recommended by stockholders that are properly submitted
in writing to M&Ts corporate secretary, which
stockholder-recommended nominees are evaluated in the same
manner as all other nominees for director.
Wilmington Trust. Wilmington Trusts
amended and restated bylaws provide that any stockholder
entitled to vote in the election of directors may nominate
directors by delivering notice to Wilmington Trusts
corporate secretary not later than: (a) for the annual
meeting, 60 days before the annual meeting if that meeting
is to be held on a day that precedes the anniversary of the
previous years annual meeting, or 90 days in advance
if the meeting is to be held on or after the anniversary of the
previous years annual meeting; and (b) for other
meetings, the close of business on the 10th day following
the date on which notice of the meeting is first mailed by
Wilmington Trust to stockholders. The notice must set forth
(i) the name and address of the stockholder who intends to
make the nomination and of the nominee; (ii) a
representation that the stockholder is a holder of record of
stock of Wilmington Trust entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(iii) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; and
(iv) such other information regarding each nominee proposed
by such stockholder as would be required to be included in a
proxy statement filed pursuant to the SEC proxy rules had the
nominee been nominated by the Board of Directors. To be
effective, each notice of intent to make a nomination must be
accompanied by the written consent of the nominee to serve as a
director of Wilmington Trust if elected.
Calling
Special Meetings of Stockholders
M&T. Under M&Ts amended and
restated bylaws, a special meeting of stockholders may be called
by M&Ts Board of Directors or M&Ts chief
executive officer, or by written request of stockholders
representing at least 25% of the outstanding M&T shares
entitled to vote.
76
Wilmington Trust. Under Wilmington
Trusts restated certificate of incorporation, a special
meeting of stockholders may be called only by the Chairman of
the Board, the Chief Executive Officer, the President, or the
Board of Directors pursuant to a resolution adopted by a
majority of the then-authorized number of directors. However, if
the purpose of the special meeting is to act upon a proposal by,
or approve an action of, a person or persons owning 10% or more
of Wilmington Trusts voting stock (which, together with
any affiliates of such person(s), we refer to as a related
person), or the meeting is called at the request of a director
other than a continuing director (generally, any director who is
unaffiliated with such person and was appointed prior to such
person attaining such 10% ownership (or succeeds another
director that was so appointed)), then a majority vote of the
continuing directors is required to call the special meeting.
Stockholder
Proposals
M&T. M&Ts amended and restated
bylaws require that all business conducted at a meeting of
stockholders be properly brought before the meeting. In order
for a stockholder proposal to be properly brought before the
meeting, any M&T stockholder making such a proposal must
give notice to M&Ts corporate secretary at
M&Ts principal executive offices no later than
(i) the 120th day prior to the date on which M&T
mailed its proxy materials for the preceding years annual
meeting if the date of the annual meeting is not changed by more
than 30 days from that of the preceding year, and
(ii) the 10th day following the date of the public
disclosure of the date of any other annual or special meeting.
The proposal must also set forth (a) the name and address
of the stockholder making the proposal, (b) the classes and
number of M&T shares owned by that stockholder,
(c) the business proposed including a brief description,
(d) the reasons for conducting the business at the meeting,
(e) any material interest of the stockholder making the
proposal in the business proposed and (f) any other
information M&Ts Board of Directors reasonably
determines is necessary for the Board and stockholders to
consider the proposal.
Wilmington Trust. Wilmington Trusts
amended and restated bylaws provide that, for a stockholder
proposal to be properly brought before an annual meeting, the
stockholder must give written notice to the corporate secretary
before the meeting. The notice must be received by the Secretary
not later than: (i) with respect to an annual meeting of
stockholders held on a day which is within 30 days of the
anniversary of the previous years annual meeting,
120 days in advance of the date of Wilmington Trusts
proxy statement in connection with the previous years
annual meeting, or (ii) with respect to all other meetings,
a reasonable time in advance of Wilmington Trusts mailing
its proxy statement. To be in proper written form, each notice
must set forth as to each matter the stockholder proposes to
bring before the meeting of stockholders: (a) a brief
description of the business desired to be brought before the
meeting and the reasons for conducting such business at the
meeting, (b) the name and address, as they appear on
Wilmington Trusts books, of the stockholder proposing such
business, (c) the class and number of shares of Wilmington
Trust that are owned by the stockholder and (d) any
material interest of the stockholder in such business.
Notice of
Stockholder Meetings
M&T. M&Ts amended and restated
bylaws provide that M&T must give written notice between 10
and 60 days before any stockholders meeting to each
stockholder entitled to vote at such a meeting. The notice shall
state the place, date and hour, and purposes of the meeting and
indicate the person who called the meeting if not an annual
meeting. The notice shall also indicate if any proposed action
to be taken at a meeting would trigger dissenters
appraisal rights.
Wilmington Trust. Wilmington Trusts
amended and restated bylaws provide that notice must be given by
mailing at least 10 days before any stockholders meeting to
each stockholder at his last known address. The notice must
state the time and place of the meeting.
Anti-Takeover
Provisions and Other Stockholder Protections
M&T. A New York corporation may elect not
to be governed by NYBCL § 912, which places
restrictions on certain business combinations with interested
stockholders. M&T has made such an election.
NYBCL § 910 provides that a stockholder of a New York
corporation has the right, following compliance with certain
procedures, to receive payment of the fair value of its shares
if the stockholder has the right to vote and does
77
not assent to, among other actions, a merger or consolidation to
which the corporation is a party. The right to receive payment
of the fair value of the shares is not available in certain
circumstances, including if the shares of the corporation are
listed on a national securities exchange (as is the case in the
present context) or to stockholders of a parent corporation in
the case of certain mergers between the parent corporation and a
90%-owned subsidiary corporation. M&T stockholders do not
have the right to receive fair value described in the
immediately preceding sentences in connection with the merger
and consummation of the transactions contemplated by the merger
agreement.
Wilmington Trust. Under Wilmington
Trusts restated certificate of incorporation, in addition
to any other vote required by law, specified transactions with
any related person, which we refer to as business combinations,
require the affirmative vote of the holders of at least 75% of
the combined voting power of the then-outstanding shares of
Wilmington Trust voting stock, voting together as a single
class, unless there are one or more continuing directors then in
office and that business combination has been approved by
Wilmington Trusts Board of Directors (including the
affirmative vote of at least a majority of the continuing
directors), in which case that business combination only
requires such vote as is required by law or by other provisions
of Wilmington Trusts restated certificate of incorporation.
In addition, DGCL § 203 prohibits a Delaware
corporation from engaging in a business combination
(as defined in the DGCL) with a person owning 15% or more of the
corporations voting stock for three years following the
time that person becomes a 15% stockholder, with certain
exceptions. Wilmington Trust has not opted out of
§ 203 and is therefore governed by the default terms
of this provision of the DGCL.
Wilmington Trusts stockholder rights agreement entitles
registered holders of Wilmington Trust common stock, on the
conditions summarized below, to purchase one one-thousandth of a
share of preferred stock at a price of $128.00 per one
one-thousandth of a share. The description and terms of the
rights agreement are set forth in an Amended and Restated Rights
Agreement dated as of December 16, 2004 between Wilmington
Trust and Wells Fargo Bank, as rights agent.
Under the rights agreement, if any person announces that it has
acquired, or commences or announces an intention to make, a
tender offer that would result in that person owning 15% or more
of the outstanding shares of Wilmington Trust common stock
(which we refer to as an acquiring person), each right entitles
its holder to receive, upon exercise, Wilmington Trust common
stock (or, in the case of a merger or other business
combination, stock of the acquiring company) having a market
value equal to two times the exercise price of the right.
Upon exercise, each share of preferred stock will be entitled,
when, as, and if declared, to a minimum preferential quarterly
dividend payment of the greater of (1) $10 per share or
(2) an amount equal to 1,000 times the dividend declared
per share of common stock. In the event of Wilmington
Trusts liquidation, dissolution or winding up, each share
of preferred stock will be entitled to a minimum preferential
payment of the greater of (1) $1,000 per share (plus any
accrued but unpaid dividends) and (2) an amount equal to
1,000 times the payment made per share of common stock. Each
share of preferred stock will have 1,000 votes, voting together
with the common stock. Finally, in the event of any merger,
consolidation, or other transaction in which outstanding shares
of common stock are converted or exchanged, each share of
preferred stock will be entitled to receive 1,000 times the
amount received per share of common stock. These rights are
protected by customary anti-dilution provisions.
If, after a person or group becomes an acquiring person,
Wilmington Trust is acquired in a merger or other business
combination transaction or 50% or more of its consolidated
assets or earning power are sold, proper provision will be made
so that each holder of a right (other than those held by the
acquiring person) will have the right to receive, upon the
exercise of a right, a number of shares of common stock of the
acquirer (or its parent) that at the time of that transaction
has a market value of two times the exercise price of the right.
The rights have certain anti-takeover effects. The rights will
cause substantial dilution to a person or group that attempts to
acquire Wilmington Trust without conditioning the offer on a
substantial number of rights being acquired. The rights,
however, should not interfere with any merger or other business
combination approved by the Board of Directors of Wilmington
Trust since, prior to any person becoming an acquiring person,
the Board of Directors may, at its option, redeem all but not
less than all of the then-outstanding rights for a nominal
redemption
78
price ($0.01 per right). In addition, for so long as the rights
are redeemable, Wilmington Trust may, except with respect to the
redemption price, amend the rights agreement in any manner.
Until a right is exercised or exchanged, the holder thereof, as
such, will have no rights as a stockholder, including the right
to vote or to receive dividends. The rights will expire on
December 16, 2014, unless such expiration date is advanced
or extended or unless the rights are earlier redeemed or
exchanged by Wilmington Trust, including immediately prior to
the completion of the merger.
On October 31, 2010, Wilmington Trust amended its rights
agreement to exempt the merger and other transactions
contemplated by the merger from the effect of the rights
agreement.
Indemnification
of Directors and Officers
M&T. Under M&Ts amended and
restated bylaws, all current and former officers and directors
of M&T are indemnified against any threatened, pending or
completed actions and appeals to the fullest extent permitted
under the NYBCL. An officer or director shall be indemnified for
any action initiated by such officer or director if such action
was authorized by M&Ts Board of Directors.
NYBCL § 721 prohibits indemnification of officers and
directors for acts finally adjudicated to be committed in bad
faith, resulting from active or deliberate dishonesty, or
resulting in a personal gain to which such an officer or
director was not legally entitled.
Wilmington Trust. Under Wilmington
Trusts restated certificate of incorporation and amended
and restated bylaws, directors are not personally liable to
Wilmington Trust or its stockholders for monetary damages for
breach of fiduciary duty, except to the extent that such
exemption from liability is not permitted by Delaware law.
Wilmington Trust will indemnify and hold harmless, to the
fullest extent permitted by applicable law, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit, or proceeding by reason of the
fact that he or she is or was a Wilmington Trust director or is
or was serving at Wilmington Trusts request as a director,
officer, employee, fiduciary or agent of another entity.
Wilmington Trust is required to indemnify such persons in
connection with a proceeding initiated by such person only if
such proceeding was authorized by Wilmington Trusts Board
of Directors.
In addition, Wilmington Trust may indemnify, to the fullest
extent permitted by applicable law, any person who was or is
made or threatened to be made a party or is otherwise involved
in any action, suit, or proceeding by reason of the fact that he
or she is or was an officer, employee or agent of Wilmington
Trust or a director, officer, employee or agent of a subsidiary
or affiliate of Wilmington Trust. Wilmington Trust may indemnify
such persons in connection with a proceeding initiated by such
person only if such proceeding was authorized by Wilmington
Trusts Board of Directors.
DGCL § 102(b)(7) prohibits an exemption or limitation
of a directors liability in cases involving a
directors breach of the duty of loyalty, acts or omissions
not in good faith, intentional misconduct, knowing violations of
law, improper personal benefits, or improper dividends or
distributions.
Amendments
to Articles/Certificate of Incorporation and Bylaws
M&T. Under the M&T amended and
restated bylaws, M&Ts bylaws may be amended or
repealed by a vote of a majority of shares of M&T entitled
to vote in the election of directors, or by a vote of a majority
of the entire M&T Board of Directors.
Under NYBCL § 803(a), a corporations certificate
of incorporation may be amended or changed by a vote of the
Board and a vote of a majority of all outstanding shares
entitled to vote. A corporations certificate of
incorporation may require a greater vote.
Wilmington Trust. Under Wilmington
Trusts amended and restated bylaws, Wilmington
Trusts bylaws may be amended, altered, repealed or
rescinded either (i) by a majority of the then-authorized
directors, and if one or more related persons exist, by a
majority of the continuing directors or (ii) by the
affirmative vote of the holders of not less than 75% of the
combined voting power of the then-outstanding voting stock,
voting together as a single class, and, if the change is
proposed by or on behalf of a related person or if at any time
one or more related persons
79
exist, by a director who is not a continuing director as to all
related persons, such alteration, amendment, repeal, or
rescission must also be approved by the affirmative vote of the
holders of a majority or more of the combined voting power of
the disinterested shares.
Under DGCL § 242, a corporations certificate of
incorporation may be amended only if the proposed amendment is
approved by the Board of Directors and, unless the amendment
adversely affects a class of non-voting shares, the holders of a
majority of the outstanding stock entitled to vote.
In addition, Wilmington Trusts amended and restated
certificate of incorporation requires that, if any amendment
relates to Article II (Definitions), V (Capital Stock), VI
(Directors), VII (Stockholder Meetings), VIII (Stockholder
Consents), IX (Factors to Consider), X (Limitation of Director
Liability), XII (Business Combinations), or XIII (Amendment of
Corporate Documents), such amendment requires approval by the
affirmative vote of 75% of the then-outstanding shares of voting
stock, voting together as a single class. Further, if at the
time there exists one or more related persons, such amendment
must also be approved by the affirmative vote of the holders of
at least a majority of the combined voting power of the
disinterested shares. The supermajority stockholder vote is not
required if the amendment has been first approved by at least
two-thirds of the then-authorized number of directors and, if at
the time there exists one or more related persons, by a majority
of the continuing directors then in office, if any.
LEGAL
MATTERS
The validity of the M&T common stock to be issued in
connection with the merger will be passed upon for M&T by
Drew J. Pfirrman, Senior Vice President and General Counsel of
M&T. As of February 9, 2011, Mr. Pfirrman
beneficially owned shares of M&Ts common stock
representing less than 1% of the total outstanding shares of
M&Ts common stock.
EXPERTS
The consolidated financial statements of M&T and
managements assessment of the effectiveness of internal
control over financial reporting (which is included in
Managements Report on Internal Control over Financial
Reporting) incorporated into this proxy statement/prospectus by
reference to the Annual Report on
Form 10-K
for the year ended December 31, 2009 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Wilmington
Trust Corporation as of December 31, 2009 and 2008,
and for each of the years in the three-year period ended
December 31, 2009, and managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2009, have been incorporated by reference
herein in reliance upon the reports of KPMG LLP, an independent
registered public accounting firm, and upon the authority of
said firm as experts in accounting and auditing. The audit
report covering the December 31, 2009, financial statements
refers to Wilmington Trusts adoption of FASB Staff
Position
No. FAS 115-2
and
FAS 124-2,
Recognition and Presentation of
Other-Than-Temporary
Impairments, (included in FASB ASC Topic 320,
Investments Debt and Equity Securities), as
of April 1, 2009.
STOCKHOLDER
PROPOSALS FOR NEXT YEAR
M&T
To be eligible under the SECs stockholder proposal rule
(Rule 14a-8)
and under M&Ts amended and restated bylaws for
inclusion in M&Ts proxy statement, proxy card, and
presentation at M&Ts 2011 annual meeting of
stockholders, a proper stockholder proposal must have been
received by M&T at its principal offices at One M&T
Plaza, Buffalo, NY 14203 no later than November 4, 2010,
which is 120 calendar days before the anniversary of the date on
which M&T first mailed its proxy statement for 2010. The
notice must be in the manner and form required by
M&Ts bylaws and
Rule 14a-8
under the Exchange Act.
80
Wilmington
Trust
Wilmington Trust intends to hold a 2011 annual meeting of
stockholders only if the merger agreement is terminated or the
merger is otherwise not consummated in a timely manner. For a
stockholder proposal to be considered for inclusion in
Wilmington Trusts proxy statement and form of proxy
relating to the Wilmington Trust 2011 annual meeting of
stockholders (in the event this meeting is held), the Secretary
of Wilmington Trust must have received the proposal in writing,
at Rodney Square North, 1100 North Market Street, Wilmington,
DE 19890-0001,
not later than October 25, 2010 if the 2011 annual meeting
is held within 30 days of April 21, 2011. If the 2011
annual meeting is held on a day that is more than 30 days
from April 21, 2011, such proposal must be received a
reasonable time in advance of Wilmington Trust mailing its proxy
statement. Those proposals must include a brief description of
the business to be brought before the meeting, the
stockholders name and address, the number and class of
shares the stockholder holds and any material interest the
stockholder has in that business. Any stockholder proposals will
be subject to
Rule 14a-8
under the Exchange Act.
Wilmington Trusts Nominating and Corporate Governance
Committee recommends nominees to the Board of Directors for
election as directors at the annual meeting. That committee will
consider nominations submitted by stockholders of record for the
2011 annual meeting of stockholders (in the event this meeting
is held) if they are received by the Secretary of Wilmington
Trust 60 days in advance of the meeting, provided that
the 2011 annual meeting is held on or before April 20,
2011. If the 2011 annual meeting is held on or after
April 21, 2011, then such nominations must be received
90 days in advance of such meeting. Nominations must
include the information required for stockholder proposals as
well as the nominees name and address, a representation
that the stockholder is a record holder of Wilmington Trust
stock or holds Wilmington Trust stock through a broker and
intends to appear in person or by proxy at the 2011 Annual
Meeting to nominate a person, information regarding the nominee
that would be required to be included in the proxy statement, a
description of any arrangement or understanding between the
stockholder and that nominee and the written consent of the
nominee to serve as a director if elected.
OTHER
MATTERS
As of the date of this proxy statement/prospectus, Wilmington
Trusts Board of Directors knows of no matters that will be
presented for consideration at the special meeting other than as
described in this proxy statement/prospectus. Wilmington
Trusts common stockholders may, however, be asked to vote
on a proposal to adjourn, postpone or continue the special
meeting, if necessary, to allow more time to solicit votes to
adopt the merger agreement. If any other matters, or any
adjournments or postponements of the meeting, properly come
before the Wilmington Trust special meeting, and are voted upon,
the enclosed proxies will be deemed to confer discretionary
authority on the individuals that they name as proxies to vote
the shares represented by these proxies as to any of these
matters. The individuals named as proxies intend to vote or not
to vote in accordance with the recommendation of the management
of Wilmington Trust.
STOCKHOLDERS
SHARING AN ADDRESS
Only one copy of this proxy statement/prospectus is being
delivered to multiple stockholders of Wilmington Trust unless
Wilmington Trust has previously received contrary instructions
from one or more stockholders. Stockholders who hold shares in
street name can request further information on
householding through their banks, brokers or other holders of
record. On written or oral request to Wells Fargo Bank, N.A.,
Wilmington Trusts stock transfer agent, at Wells Fargo
Shareowner Services, P.O. Box 64854, St. Paul, MN
55164,
(800) 999-9867,
Wilmington Trust will deliver promptly a separate copy of this
proxy statement/prospectus to a stockholder at a shared address
to which a single copy of the document was delivered.
Stockholders sharing an address who wish, in the future, to
receive separate copies or a single copy of Wilmington
Trusts proxy statements and annual reports should provide
written or oral notice to Wells Fargo Bank, N.A., at the address
and telephone number set forth above. Holders in street
name who wish, in the future, to receive separate copies
or a single copy of Wilmington Trusts proxy statements and
annual reports, must contact their banks and brokers.
81
WHERE YOU
CAN FIND MORE INFORMATION
M&T has filed a registration statement with the SEC under
the Securities Act that registers the shares of M&T common
stock to be issued in the merger to Wilmington Trust common
stockholders and includes this proxy statement/prospectus. The
registration statement, including the attached exhibits and
schedules, contains additional relevant information about
M&T and its common stock, Wilmington Trust and the combined
company. The rules and regulations of the SEC allow us to omit
some information included in the registration statement from
this proxy statement/prospectus.
In addition, M&T (File
No. 1-9861)
and Wilmington Trust (File
No. 1-14659)
file reports, proxy statements and other information with the
SEC under the Exchange Act. You may read and copy this
information at the Public Reference Room of the SEC,
100 F Street, N.E., Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference
Room by calling the SEC at l-800-SEC-0330.
The SEC also maintains an Internet site that contains reports,
proxy statements and other information about issuers, like
M&T and Wilmington Trust, that file electronically with the
SEC. The address of that site is
http://www.sec.gov.
M&Ts Internet address is
http://www.mtb.com
and Wilmington Trusts Internet address is
http://www.wilmingtontrust.com.
The information on M&Ts and Wilmington Trusts
Internet sites is not a part of this proxy statement/prospectus.
You can also inspect reports, proxy statements and other
information about M&T at the offices of the NYSE,
20 Broad Street, New York, New York 10005.
The SEC allows M&T and Wilmington Trust to
incorporate by reference information into this proxy
statement/prospectus. This means that M&T and Wilmington
Trust can disclose important information to you by referring you
to another document filed separately with the SEC. The
information incorporated by reference is considered to be a part
of this proxy statement/prospectus, except for any information
that is superseded by information that is included directly in
this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the
documents listed below that M&T and Wilmington Trust have
previously filed with the SEC. They contain important
information about our companies and their financial condition.
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M&T Filings
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Period or Date Filed
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Annual Report on
Form 10-K
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Year ended December 31, 2009
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Proxy Statement on Schedule 14A
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March 5, 2010
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Quarterly Reports on
Form 10-Q
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Quarters ended March 31, 2010; June 30, 2010; and September 30,
2010
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Current Reports on
Form 8-K
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January 20, 2010; January 25, 2010; March 11, 2010; April 19,
2010; April 23, 2010; May 4, 2010; June 15, 2010; July 21, 2010;
September 13, 2010; October 13, 2010; October 20, 2010; November
1, 2010; November 2, 2010; November 4, 2010; November 19,
2010; January 14, 2011; and January 25, 2011 (in each
case, except to the extent furnished but not filed)
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The description of M&T common stock set forth in
M&Ts registration statements on
Form 8-A
filed pursuant to Section 12 of the Exchange Act, and any
amendment or report filed for the purpose of updating any such
description
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January 28, 1997; May 20, 1998; and February 1, 2008
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82
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Wilmington Trust Filings
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Period or Date Filed
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Annual Report on
Form 10-K
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Year ended December 31, 2009
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Proxy Statement on Schedule 14A
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February 22, 2010
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Quarterly Reports on
Form 10-Q
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Quarters ended March 31, 2010; June 30, 2010; and September 30,
2010
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Current Reports on
Form 8-K
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January 29, 2010; February 26, 2010; April 23, 2010; May
21, 2010; June 4, 2010; July 23, 2010; October 18, 2010; October
21, 2010; November 1, 2010; November 2, 2010;
November 22, 2010; December 23, 2010; and
January 28, 2011 (in each case, except to the extent
furnished but not filed)
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The description of Wilmington Trust common stock set forth in
Wilmington Trusts registration statements on
Form 8-A
filed pursuant to Section 12 of the Exchange Act, and any
amendment or report filed for the purpose of updating any such
description
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December 1, 1998 and December 22, 2004
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M&T and Wilmington Trust incorporate by reference
additional documents that they may file with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this proxy statement/prospectus and the date
of Wilmington Trusts special meeting (other than the
portions of those documents not deemed to be filed). These
documents include periodic reports, such as Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K,
as well as proxy statements.
M&T has supplied all information contained or incorporated
by reference into this proxy statement/prospectus relating to
M&T, and Wilmington Trust has supplied all such information
relating to Wilmington Trust.
You can obtain any of the documents incorporated by reference
into this proxy statement/prospectus through M&T or
Wilmington Trust, as the case may be, or from the SEC through
the SECs Internet site at the address described above.
Documents incorporated by reference are available from the
companies without charge, excluding any exhibits to those
documents unless the exhibit is specifically incorporated by
reference as an exhibit in this proxy statement/prospectus. You
can obtain documents incorporated by reference into this proxy
statement/prospectus by requesting them in writing or by
telephone from the appropriate company at the following address:
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M&T Bank Corporation
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Wilmington Trust Corporation
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Attention: Shareholder Relations
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Attention: Investor Relations
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One M&T Plaza
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Rodney Square North
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Buffalo, New York 14203
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1100 North Market Street
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(716)
842-5138
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Wilmington, Delaware 19890
(302) 651-8069
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If you would like to request documents, please do so by
March 15, 2011, to receive them before the Wilmington Trust
special meeting. If you request any incorporated documents from
our companies, we will mail them to you by first-class mail, or
another equally prompt means, within one business day after we
receive your request.
We have not authorized anyone to give any information or make
any representation about the merger or our companies that is
different from, or in addition to, that contained in this proxy
statement/prospectus or in any of the materials that M&T or
Wilmington Trust have incorporated into this proxy
statement/prospectus. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are
in a jurisdiction where offers to exchange or sell, or
solicitations of offers to exchange or purchase, the securities
offered by this proxystatement/prospectus or the solicitation of
proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer
presented in this proxy statement/prospectus does not extend to
you. The information contained in this proxy
statement/prospectus speaks only as of the date of this proxy
statement/prospectus unless the information specifically
indicates that another date applies.
83
ANNEX A
AGREEMENT AND PLAN OF MERGER
by and among
M&T Bank Corporation,
MTB One, Inc.
and
Wilmington Trust Corporation
dated as of October 31, 2010
TABLE OF
CONTENTS
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Page
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ARTICLE I
The Merger
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1.1
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The Merger
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A-1
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1.2
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Closing
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A-1
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1.3
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Effects of the Merger
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A-1
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1.4
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Conversion of Stock
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A-1
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1.5
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Stock Options
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A-3
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1.6
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Other Stock-Based Awards
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A-3
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1.7
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Company Employee Stock Purchase Plan
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A-3
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1.8
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Changes in Company Common Stock
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A-3
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1.9
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Certificate of Incorporation and By-Laws of the Surviving
Corporation
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A-3
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1.10
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Directors and Officers
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A-3
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1.11
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Reservation of Right to Revise Structure
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A-4
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1.12
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Directors of Parent
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A-4
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ARTICLE II
Delivery of Merger Consideration
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2.1
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Exchange Agent
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A-4
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2.2
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Deposit of Merger Consideration
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A-4
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2.3
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Delivery of Merger Consideration
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A-4
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ARTICLE III
Representations and Warranties of Company
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3.1
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Standard
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A-6
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3.2
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Corporate Organization
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A-6
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3.3
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Capitalization
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A-7
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3.4
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Authority; No Violation
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A-8
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3.5
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Consents and Approvals
|
|
|
A-8
|
|
|
3.6
|
|
|
Reports; Regulatory Matters
|
|
|
A-9
|
|
|
3.7
|
|
|
Financial Statements
|
|
|
A-10
|
|
|
3.8
|
|
|
Absence of Certain Changes or Events
|
|
|
A-10
|
|
|
3.9
|
|
|
Compliance with Applicable Law
|
|
|
A-11
|
|
|
3.10
|
|
|
Legal Proceedings
|
|
|
A-11
|
|
|
3.11
|
|
|
Taxes and Tax Returns
|
|
|
A-12
|
|
|
3.12
|
|
|
Employee Matters
|
|
|
A-13
|
|
|
3.13
|
|
|
Labor
|
|
|
A-14
|
|
|
3.14
|
|
|
Contracts
|
|
|
A-14
|
|
|
3.15
|
|
|
Intellectual Property
|
|
|
A-15
|
|
|
3.16
|
|
|
Broker-Dealer and Investment Advisory Matters
|
|
|
A-16
|
|
|
3.17
|
|
|
Rights Agreement; State Takeover Laws
|
|
|
A-16
|
|
|
3.18
|
|
|
Property
|
|
|
A-17
|
|
|
3.19
|
|
|
Loan Matters
|
|
|
A-17
|
|
|
3.20
|
|
|
Insurance
|
|
|
A-18
|
|
|
3.21
|
|
|
Derivative Instruments and Transactions
|
|
|
A-18
|
|
|
3.22
|
|
|
Affiliate Transactions
|
|
|
A-18
|
|
A-ii
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
3.23
|
|
|
Opinion
|
|
|
A-18
|
|
|
3.24
|
|
|
Brokers Fees
|
|
|
A-19
|
|
|
3.25
|
|
|
Company Information
|
|
|
A-19
|
|
|
3.26
|
|
|
No Other Representations or Warranties
|
|
|
A-19
|
|
|
ARTICLE IV
Representations and Warranties of Parent and Merger Sub
|
|
4.1
|
|
|
Standard
|
|
|
A-19
|
|
|
4.2
|
|
|
Corporate Organization
|
|
|
A-19
|
|
|
4.3
|
|
|
Capitalization
|
|
|
A-20
|
|
|
4.4
|
|
|
Authority; No Violation
|
|
|
A-20
|
|
|
4.5
|
|
|
Consents and Approvals
|
|
|
A-20
|
|
|
4.6
|
|
|
Reports; Regulatory Matters
|
|
|
A-21
|
|
|
4.7
|
|
|
Financial Statements
|
|
|
A-21
|
|
|
4.8
|
|
|
Absence of Certain Changes or Events
|
|
|
A-21
|
|
|
4.9
|
|
|
Compliance with Applicable Law
|
|
|
A-21
|
|
|
4.10
|
|
|
Legal Proceedings
|
|
|
A-21
|
|
|
4.11
|
|
|
Parent Information
|
|
|
A-22
|
|
|
4.12
|
|
|
Ownership of Shares; Not an Interested Stockholder
|
|
|
A-22
|
|
|
4.13
|
|
|
No Other Representations or Warranties
|
|
|
A-22
|
|
|
ARTICLE V
Covenants Relating to Conduct of Business
|
|
5.1
|
|
|
Conduct of Businesses Prior to the Effective Time
|
|
|
A-22
|
|
|
5.2
|
|
|
Company Forbearances
|
|
|
A-23
|
|
|
5.3
|
|
|
Parent Forbearances
|
|
|
A-25
|
|
|
5.4
|
|
|
Assumption by Parent of Certain Obligations
|
|
|
A-26
|
|
|
ARTICLE VI
Additional Agreements
|
|
6.1
|
|
|
Form S-4; Stockholder Approval
|
|
|
A-26
|
|
|
6.2
|
|
|
Regulatory Matters
|
|
|
A-26
|
|
|
6.3
|
|
|
Access to Information
|
|
|
A-27
|
|
|
6.4
|
|
|
Employee Matters
|
|
|
A-28
|
|
|
6.5
|
|
|
Indemnification; Advancement of Expenses; Exculpation and
Insurance
|
|
|
A-29
|
|
|
6.6
|
|
|
Exemption from Liability Under Section 16(b)
|
|
|
A-30
|
|
|
6.7
|
|
|
Listing
|
|
|
A-30
|
|
|
6.8
|
|
|
Wealth Advisory Services and Corporate Client Services to be
Held Separate
|
|
|
A-30
|
|
|
6.9
|
|
|
[Reserved]
|
|
|
A-31
|
|
|
6.10
|
|
|
Commitments to the Community
|
|
|
A-31
|
|
|
6.11
|
|
|
No Solicitation
|
|
|
A-31
|
|
|
6.12
|
|
|
Registered Investment Companies
|
|
|
A-33
|
|
A-iii
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE VII
Conditions Precedent
|
|
7.1
|
|
|
Conditions to Each Partys Obligation To Effect the Merger
|
|
|
A-34
|
|
|
7.2
|
|
|
Conditions to Obligations of Parent
|
|
|
A-34
|
|
|
7.3
|
|
|
Conditions to Obligations of the Company
|
|
|
A-34
|
|
|
ARTICLE VIII
Termination and Amendment
|
|
8.1
|
|
|
Termination
|
|
|
A-35
|
|
|
8.2
|
|
|
Effect of Termination
|
|
|
A-36
|
|
|
8.3
|
|
|
Fees and Expenses
|
|
|
A-36
|
|
|
8.4
|
|
|
Amendment
|
|
|
A-37
|
|
|
8.5
|
|
|
Extension; Waiver
|
|
|
A-37
|
|
|
ARTICLE IX
General Provisions
|
|
9.1
|
|
|
Closing
|
|
|
A-37
|
|
|
9.2
|
|
|
Nonsurvival of Representations, Warranties and Agreements
|
|
|
A-37
|
|
|
9.3
|
|
|
Notices
|
|
|
A-37
|
|
|
9.4
|
|
|
Interpretation
|
|
|
A-38
|
|
|
|