M&T Bank (NYSE:MTB) plans to acquire People's United Financial (NASDAQ:PBCT) in another big deal among consolidating regional banks.

It will be an all-stock transaction worth $7.6 billion, valuing shares of People's United at $17.70, or 164% of tangible book value. The purchase price represents a nearly 13% premium over the closing price of People's shares last Friday.

The deal will bring together two of the largest regional banks headquartered in the Northeast (M&T is based in Buffalo, New York, and People's United in Bridgeport, Connecticut) and create a bank with roughly $200 billion in assets.

Picture of two people shaking hands.

Image source: Getty Images.

The integration of People's United will stretch M&T's footprint from the mid-Atlantic into New England.

"Combining our common legacies and our complementary footprints will strengthen our ability to serve our communities and customers, and provide solutions that make a difference in people's lives," said René Jones, CEO of M&T, who will lead the combined company.

Five current board members of People's United will join M&T's board of directors following completion of the transaction.

The deal will be immediately accretive to M&T's tangible book value and will also be accretive to earnings in 2022 by 7% to 8%. That means that the earnings of the combined company will be higher than the combined earnings of both companies on a stand-alone basis.

M&T expects to be able to take out 30% of People's United's annual expense base, including People's planned closures of its Stop & Shop branches, which hasn't happened yet.

The deal is expected to close in the fourth quarter of the year. Shares of People's United were up close to 11% at one point this morning, while shares of M&T traded higher to open the day as well.

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