DEALTALK-Cash-rich People's United on the prowl for takeovers

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By Anurag Kotoky

BANGALORE, April 23 (Reuters) - A well-capitalized bank like Valley National Bancorp (VLY.N) could be a strategic fit for People's United Financial Inc (PBCT.O), which, with its $2.5 billion of excess cash, is actively seeking to snap up a bank.

"They (People's United) want a high-quality commercial bank at a bargain price and there are not a whole lot of banks in that category now," Anthony Polini, an analyst at Raymond James, told Reuters.

People's United spokesman Brent DiGiorgio declined to comment on Valley but said the company was actively seeking acquisitions of like-minded banks in the corridor from Maine to Washington, D.C.

Bridgeport, Connecticut-based People's United, which is looking to double or triple its assets over the next two to five years, has been one of the better capitalized banks in the country.

"Banks in America would love to have a balance sheet as strong as People's," Janney Montgomery Scott analyst Rick Weiss said in a note to clients.

At the end of first quarter, People's United had a tangible common equity ratio -- a measure of capital strength closely watched by investors these days -- of over 19 percent, higher than most of the banks in the nation.

People's United, which was added to the S&P 500 Index .SPX last November, is looking for a relatively high-quality commercial bank at a distressed price and Valley National could be the one, Polini said.

Wayne, New Jersey-based Valley National said it had not received any acquisition offers but would be "receptive" if any came in.

"If the offer is adequate, anyone would own the company," Valley's Chief Executive Gerald Lipkin told Reuters in an interview.

Analysts said it is unlikely that Valley would agree to a takeover, given the weakness in its stock price, but the bank tops the list of potential targets for People's United.

Shares of Valley National, currently valued at about $1.8 billion, have lost 47 percent of their value since hitting a 52-week high of $24.75 last September.

"If I were Valley, I would not be selling now. You need to sell it at a 100 percent premium to get back to where you were. And usually you do not see premiums go higher than 20 percent," Polini said.

Sterne Agee analyst Matthew Kelley said apart from Valley, Fulton Financial Corp (FULT.O), Wilmington Trust Corp (WL.N) and Independent Bank Corp (INDB.O) could be on People's radar.

However, he doesn't expect a deal any time soon.