Shareholders of Pittsfield’s Berkshire Hills Bancorp Inc. and Legacy Bancorp Inc. have approved the plan for Berkshire to acquire Legacy and its subsidiary, Legacy Banks.
The definitive merger agreement, which was first announced in December, is expected to be completed in July.
The merger of Legacy into Berkshire will create a combined institution with approximately $4 billion in assets. This in-market merger will create efficiencies and market share benefits for the combined banks, which will have more than 60 offices serving Berkshire County, the Pioneer Valley, New York and Southern Vermont.
Under the terms of the merger agreement, each outstanding share of Legacy common stock will be exchanged for 0.56385 Berkshire common shares plus $1.30 in cash. Berkshire expects to issue approximately 4.4 million shares in conjunction with this merger, bringing its total shares outstanding to approximately 21.1 million and its total market capitalization to approximately $450 million based on Berkshire’s recent stock price.
Consummation of the merger is subject to approval by state and federal regulatory agencies. The merger is also conditioned on an acceptable agreement for the divestiture of approximately $160 million of Legacy deposits in Berkshire County. It is expected that this divestiture will be completed in 2011; any divestiture gains will be shared in accordance with the merger agreement. Both the Berkshire Bank Foundation and The Legacy Banks Foundation will continue to provide charitable contributions to the communities.
At the Berkshire shareholder meeting, the merger agreement was approved by 99 percent of the shares voting on the proposal, and these affirmative votes constituted 79 percent of the total shares outstanding. At the Legacy shareholder meeting, the merger agreement was approved by 99 percent of the shares voting on the proposal, and these affirmative votes constituted 61 percent of the total shares outstanding. For both companies, the approval of the merger required the affirmative vote of the majority of the outstanding shares of each company. Additionally, Berkshire shareholders approved a proposal to increase the total number of authorized common shares to 50 million from the present amount of 26 million. The affirmative votes for this proposal represented 97 percent of the shares voting on the proposal and 88 percent of the shares outstanding, and approval required the affirmative vote of the majority of shares outstanding.
Under the terms of the merger agreement, Berkshire and Legacy are coordinating their shareholder dividends. Berkshire shareholders received a 16-cent cash dividend in each of the first and second quarters of this year, and Legacy shareholders received a 5-cent cash dividend in each of those quarters. Based on the July expected merger closing date, Legacy does not anticipate paying an additional quarterly dividend. Berkshire normally declares its third quarter dividend near the end of July and the dividend is normally payable in August to shareholders of record in August.
