William Crawford IV, left, and William McGurk in 2011. Image courtesy of Rockville Bank
The largest private shareholder of United Financial Bancorp stock has criticized the company’s planned acquisition by People’s United Bank.
William McGurk, the former 30-year CEO of Rockville Bank, which merged with United Bank in 2014, recently told Patch that the deal “stinks.”
“It’s a great deal for People’s United and a lousy deal for United Bank,” McGurk said. “And I’ll probably vote against the takeover. I’ve sent a note to every major shareholder to discuss the dismal stock performance.”
McGurk pointed out that he owns 200,000 shares of United Financial Bancorp, which he said makes him the largest private shareholder.
People’s United has entered into a definitive agreement to acquire United in an all-stock transaction valued at $759 million. Under the terms of the deal, each United share will be exchanged for .875 of a People’s United share, valuing each share at $14.74 per United Financial Bancorp share based on the closing price of People’s United’s common stock on July 12.
On the day the acquisition was announced, United Financial stock traded at $14.17 per share.
“A buyout at $14.74 is a minuscule premium for the typical shareholder,” McGurk said. “The execs are trying to get their earnings back. [People’s United CEO Jack] Barnes stumbled into this because [United Bank CEO William] Crawford was in a weak position because of investments.”
United Bank regularly turned in many past profitable quarters, but its pace of growth slowed between 2017 and the end of 2018, and the bank also saw important shareholder metrics decline. United’s return on average assets fell to 0.8 percent and its return on equity dropped from 9.26 percent to 7.86 percent between the last quarter of 2018 and the first quarter of 2019.
The bank also ran into trouble with some of its tax credit investments that were found to allegedly be linked to a Ponzi scheme. Those investments could result in losses for the bank in excess of $40 million.
McGurk led Rockville Bank for 31 years and also helped make the bank’s slogan “That’s my bank” popular throughout north-central Connecticut. When he retired in 2011, Crawford succeeded him as president and CEO.
The deal between People’s United and United is expected to close in the fourth quarter of the year, which McGurk said will give him plenty of time to make his opinions known.
“If you take care of the customer, you will take care of the bank. The bank now seems to be saving money for the big boys. That’s now the real culture,” he said. “That’s not my bank.”
