Rockland Trust has inked a $1.15 billion deal to acquire smaller rival East Boston Savings Bank, a move that would expand South Shore-based Rockland’s presence in Boston’s northern suburbs in a big way.
The deal, announced late Thursday afternoon, is the latest among a scramble of regional bank mergers in recent months. It’s similar in several ways to the $642 million purchase of Century Bank that Eastern Bank announced two weeks ago: a bigger local public bank buying a smaller one to bulk up in the Greater Boston market.
There is at least one key difference between this deal and the Eastern-Century marriage: Eastern agreed to pay Century shareholders entirely with cash, from a stockpile left over from Eastern’s initial public offering last October. By contrast, at the request of the directors of East Boston, Rockland is offering an all stock deal, which provides some tax advantages to the holders of shares in the bank being acquired. Shareholders in Meridian Bancorp, the holding company of East Boston Savings, will get 0.275 of a share in Independent Bank Corp., Rockland’s holding company, for each share of Meridian that they own. That translates to a 22 percent premium, based on the closing price of both stocks on Wednesday.
The addition of East Boston Savings, with $6.5 billion in assets, will swell Rockland’s total assets to $20 billion. That will keep Rockland within striking distance in terms of size of Boston-based Eastern, which will have $22 billion-plus in assets after it swallows the Century franchise. Both acquisitions will be the largest deals in Rockland’s and Eastern’s histories. As with Eastern CEO Bob Rivers, Rockland chief Chris Oddleifson is primarily interested in acquisitions in or adjacent to his bank’s existing footprint, all within a relatively easy drive from the headquarters.
“We’re not on airplanes or helicopters jetting around to various states,” Oddleifson said. “While we are [getting] bigger, we are also super-in-touch with the entire market.”
The premium was similar, too: Eastern’s cash offer represented a 26 percent improvement on Century’s stock price at the time of the announcement.
This will be the 11th bank purchase that Oddleifson has engineered since joining Rockland as its CEO in 2003. Rockland has remained true to its corporate name, Independent Bank, by focusing on organic growth and smaller acquisitions, rather than selling to a larger buyer or making a game-changing deal to expand out of state.
“We believe slow and steady wins the race,” Oddleifson said. “We’re not interested in getting big for bigness’ sake.”
The two banks’ branch networks fit together nicely with minimal overlap: East Boston grew over time from its urban stronghold, largely by moving into the suburbs north of Boston — its parent, Meridian, is based in Peabody. Meanwhile, Rockland gradually expanded across the South Shore, Cape Cod, and South Coast and then into the western suburbs, before eventually moving into Boston and several communities north of the city before this deal. Rockland’s branch network consists of about 100 locations, while East Boston Savings Bank has 42 full-service branches.
Rockland, now headquartered in Hanover, employs about 1,400 people; East Boston Savings has around 500. Oddleifson said it’s too early to know how many jobs will be trimmed as a result of the acquisition. East Boston Savings chief executive Richard Gavegnano is expected to stay on as a consultant after the merger, while the makeup of the Rockland holding company’s board will not change.
The COVID-19 pandemic initially appeared to put deal-making in the banking industry on pause. But now, deals are getting hammered out seemingly almost on a weekly basis, as older executives look to retire and management teams seek to better equip their banks to weather the low-interest rate environment, the costs of increased regulatory scrutiny, and the need to stay current with mobile technology.
In January, Boston Private Bank agreed to be sold to the parent of Silicon Valley Bank, a deal valued at $900 million. In February, Bridgeport-based People’s United agreed to sell itself to M&T Bank, for $7.6 billion. Then, just this past Monday, the parent of Connecticut-based Webster Bank inked a deal to buy Sterling Bancorp of suburban New York, in a merger of equals that will create a bank valued at $10 billion. Webster will move its headquarters from Waterbury to Stamford as a result.