Connecticut-based People’s United Financial Inc. has acquired Danvers Bancorp Inc., the holding company for Danversbank, for approximately $493 million.
People’s United, the holding company for People’s United Bank, will acquire Danvers in a 55 percent stock and 45 percent cash transaction.
People’s United has been aggressively expanding its acquisitions and branch network, most recently buying North Andover’s RiverBank in a deal that closed in late 2010. It also purchased the failed Lowell-based Butler Bank in an FDIC-assisted deal in April. The bank also recently opened its first two Boston branches in the Financial District and the Prudential Center, a location already heavy with DanversBank locations.
"We are pleased that Danversbank has chosen to grow with People’s United Bank," said Jack Barnes, president and chief executive officer of People’s United Financial. "Danversbank, combined with our existing Massachusetts presence, makes People’s United – New England’s largest independent bank – the seventh largest bank both in Massachusetts and in the Boston MSA … It complements our continuous footprint from Worcester, in central Massachusetts, through Boston and on into New Hampshire."
"I’m confident that this transaction will benefit Danvers Bancorp shareholders, customers and employees," said Kevin T. Bottomley, chairman, president and chief executive officer of Danvers Bancorp. "People’s United brings substantial resources for increased lending, additional products and services and opportunities for professional development for our employees. When coupled with our highly experienced lending staff and extensive eastern Massachusetts branch network, the combined organization will be well positioned to compete with the biggest players in the Greater Boston area."
Bottomley will join the People’s United board of directors upon the closing of the transaction. In addition, he will be a strategic advisor to People’s United in its efforts to successfully integrate the Danversbank organization and grow People’s United in the Greater Boston market.
People’s United expects the transaction to be immediately accretive to operating earnings with an IRR greater than 15 percent. The transaction is expected to close late in the second quarter.
Under the terms of the definitive agreement, which has been approved by both companies’ boards of directors, Danvers Bancorp shareholders may elect to receive either $23 in cash, or 1.624 shares of People’s United Financial stock for each Danvers Bancorp share, subject to customary pro ration provisions, whereby 55 percent of Danvers Bancorp shares will be exchanged for stock and 45 percent for cash. The transaction is valued at $23 per Danvers Bancorp share, based on the average closing price of People’s United for the 10-day period ended Jan. 19. The receipt of People’s United Financial stock by shareholders of Danvers Bancorp is expected to be tax-free.
To ensure the continuity of Danversbank’s philanthropic and community-based mission and for the benefit of the communities traditionally served by Danversbank, the parties have agreed that The Danversbank Charitable Foundation Inc. will continue its separate existence for a period following the consummation of the transaction. People’s United has also agreed to make certain charitable contributions in Danvers’ market area in the near-term. Bottomley will serve as chairman of the board of directors of the foundation and, in recognition of the combined franchise, the board will be expanded with the addition of two directors to be proposed by People’s United.
People’s United was advised in this transaction by Keefe, Bruyette & Woods as financial advisor and Simpson Thacher & Bartlett LLP as legal counsel. Danvers Bancorp was advised by Endicott Financial Advisors LLC, as financial advisor, and received a fairness opinion from Sandler O’Neill & Partners L.P., while Hogan Lovells US LLP acted as legal counsel.
