Hudson United Bancorp, one of the largest New Jersey-based banks, is reportedly for sale.
Citing unnamed sources, Bloomberg News said Tuesday morning that the Mahwah-based bank hired Morgan Stanley to arrange an auction.
Morgan Stanley officials declined to comment and referred questions to the bank. Neither the bank’s chief executive, Kenneth T. Neilson, nor Chief Financial Officer William Houlihan returned phone calls.
The market reacted to the report.
Hudson United shares soared 8 percent, or $2.86, ending the trading day at $38.59, a 12-month high.
“Could the company be for sale? Absolutely,” said Gerard Cassidy, analyst with RBC Capital Markets. “We take these rumors seriously,” he said.
Any potential buyer would have to be big enough to pay about $2.1 billion, according to Bloomberg.
If Hudson United is sold it would be the largest deal involving a New Jersey-based bank since FleetBoston Bancorp acquired Summit Bancorp for $7 billion in March 2001.
Industry observers say the climate for big bank deals seems to be warming up. Last month, BB&T Corp. acquired First Virginia Banks for $3.05 billion. Roslyn Bancorp agreed to be bought by New York Community Bancorp for $1.6 billion.
Signs of an improving economy and higher stock prices may prompt more banks to shop around for ways to add revenue and expand turf.
“The rumor mill is working overtime, and all of the economic and business indicators seem pointed in the right direction,” said David Longobardi, editor in chief of American Banker, a trade publication.
Unidentified sources cited by Bloomberg named half a dozen possible bidders for Hudson United: Citigroup, J.P. Morgan Chase, Royal Bank of Scotland, Washington Mutual, and Bank of Nova Scotia.
Cassidy said other potential acquirers might include FleetBoston, Wachovia Corp., and PNC Financial Services Group, which are the first-, second-, and third-largest deposit holders, respectively, in New Jersey.
“I think the merger climate is going to heat up and that’s good,” said Larry Seidman, an activist shareholder – one who lobbies to maximize shareholder value in the short term – who doesn’t own shares in Hudson United.
“I think by the end of the year the whole New Jersey banking landscape is going to be different,” said Jon Trugman, general partner of Pendulum Capital Management, a small hedge fund in New York City that does not own Hudson United shares.
Being a takeover target would be a switch for Hudson United.
Hudson United under Neilson has been one of the most aggressive acquirers of other financial institutions. In the past decade, it bought 27 financial companies.
The buying spree stalled for awhile when an attempted merger of equals with Dime Bancorp announced in 1999 was thwarted by North Fork Bancorp. North Fork made a higher, hostile bid for Dime, which proved unsuccessful. Dime ended up being acquired by Seattle-based Washington Mutual.
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E-mail: newman@northjersey.com
(SIDEBAR, page B01)
At a glance
Hudson United Bancorp
Description: Full-service commercial bank based in Mahwah with 206 offices in New Jersey, New York, Connecticut, and Pennsylvania.
Chief Executive: Kenneth T. Neilson
Assets: $8 billion
Deposits: $6.2 billion
New Jersey offices: 103, with 37 in Bergen and Passaic counties
Sources: Hudson United Bancorp, FDIC
