KeyCorp strikes $4.1B deal for rival bank First Niagara

CLEVELAND (AP) - KeyCorp will expand deeper into the Northeast with a $4.1 billion deal to buy First Niagara Financial Group and create the 13th largest commercial bank in the United States.

Cleveland-based KeyCorp said Friday that it will pay a portion of its stock and $2.30 in cash for each share of First Niagara. The total comes to $11.40 per share based on the Thursday closing price of Key Corp's stock. That's a roughly 10 percent premium to First Niagara's $10.38 closing price on Thursday.

First Niagara shares edged up 4 cents to $10.42 in morning trading Friday while KeyCorp dropped 85 cents, or 6.3 percent, to $12.53.

Buffalo, New York-based First Niagara Financial Group Inc. has nearly 400 locations in New York, Pennsylvania, Connecticut and Massachusetts. It has $39 billion in assets and $29 billion in deposits.

The combined company will have more than 1,300 bank branches in 15 states. It will have $99.8 billion in deposits and $83.6 billion in loans.

The deal is expected to close next year in the third quarter.