Independent Bank Corp. will acquire Brighton-based Peoples Federal Bancshares in a $130.6 million deal expected to close early next year.
"This is part of the puzzle that positions us as the alternative regional commercial bank," Christopher Oddleifson, CEO of Independent and Rockland Trust, said today.
Peoples Federal Bancshares Inc. is the corporate holding company for Peoples Federal Savings Bank. Independent Bank Corp. is the parent company of Rockland Trust.
Peoples Federal has eight full-service branches, four of them within the city of Boston in Brighton, Allston, West Roxbury and Jamaica Plain. The other branches are located in Brookline, Norwood, Westwood and West Newton, and the bank presently has approximately $606 million in total assets, $435 million in deposits and $497 million in loans.
Oddleifson said Rockland Trust intends to keep all those branches and branch personnel. Additionally, two of Peoples Federal’s senior management will join Rockland Trust. Jim Gavin, presently chief lending officer at Peoples Federal, will join Rockland Trust as senior vice president of commercial lending, and Chris Lake, currently chief financial officer, will join the bank as senior vice president and director of risk management.
"I just can’t understate the importance of that," Oddleifson said. "Often when senior management leaves, some of that continuity leaves and it takes a while to gain that momentum again. This will help begin the momentum before the deal even closes and charge into the market faster with a great deal of momentum."
Oddleifson said that Independent had been in talks with Peoples Federal for a few months now.
"Because the number of banks that are stock-based are so few … it used to be, you could predict, there would be four or five a year, and Citizens, TD or Sovereign would buy them all," he said. "A couple months ago, we were invited into a process. We got a confidential book of information, we evaluated that, and sent them a letter of interest, and then we were invited to an exclusive negotiation … It was a competitive process, and fortunately, we came out on top."
According to a statement announcing the deal, 60 percent of outstanding Peoples Federal Bancshares shares will be exchanged for Independent shares at a fixed exchange ratio of 0.5523 of an Independent share for each Peoples Federal share. The remaining 40 percent of Peoples Federal shares will be exchanged for $21 per share in cash.
Based on Independent’s $36.17 per share closing price on Monday, the transaction is valued at approximately $130.6 million. The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes and to provide a tax-free exchange for Peoples Federal Bancshares, shareholders who receive Independent shares.
The agreement provides that, effective as of and contingent upon the merger, Independent and Rockland Trust will add to its board of directors one current member of Peoples Federal Bancshares’ board of directors.
The transaction has been approved by the board of directors of each company but is subject to certain conditions, including the receipt of required regulatory approvals, and approval by Peoples Federal Bancshares’ shareholders. The parties anticipate that the transaction will close in the first quarter of 2015.
Independent was advised by Keefe, Bruyette & Woods Inc. and used Day Pitney LLP and Choate Hall & Stewart LLP as its legal counsel. Peoples Federal was advised by Sandler O’Neill + Partners L.P. and used Bingham McCutchen LLP as its legal counsel.
