Berkshire Bank’s parent company Berkshire Hills Bancorp and Brookline Bancorp, which operates Brookline Bank, Bank Rhode Island, and PCSB Bank, have agreed to merge in an all-stock transaction valued at around $1.1bn.
The transaction values Brookline Bancorp at $12.68 per share, based on Berkshire Hills’ closing share price of $30.2 on 13 December 2024.
According to the terms of the definitive agreement, each shareholder of Brookline Bancorp will receive 0.42 shares of Berkshire Hills common stock for every share of Brookline Bancorp stock.
In line with the proposed merger, Berkshire Hills has signed subscription agreements with investors to secure $100m in equity financing through a private placement of common stock at $29 per share.
The capital raise is expected to close on 19 December 2024 and will reinforce the balance sheet and regulatory capital ratios of the merged bank.
Berkshire Hills president and CEO Nitin Mhatre said: “Today marks a transformational milestone in the history of two storied institutions with a strong commitment to serving their clients and communities.
“The combined organisation will be in an even stronger position to deliver exceptional client experience and create greater value for shareholders.”
Upon the completion of the deal, Berkshire Hills shareholders will own approximately 51% of the combined entity, while the Brookline shareholders will hold a 45% stake. The remaining 4% interest in the merged company will be held by investors from equity raise.
The merger is expected to establish a $24bn financial institution. The entity will benefit from economies of scale and monetise on growth opportunities through business diversification and improved competitive positioning.
Operations of the merged entity will span across five states. In addition, the deal is expected to strengthen the bank’s presence in key markets.
Though better operational efficiencies and diversified business offerings, the transaction will also provide increased lending capacity and investment in client services.
Brookline Bancorp chairman and CEO Paul Perrault said: “This transaction presents an opportunity to bring together two historic franchises in the Northeast market.
“By bringing together two complementary cultures and geographic footprints with shared values and client focus, we will be better positioned to serve our customers, employees, communities and shareholders.”
The operational headquarters of the new entity will be based in Boston, Massachusetts, with support centres distributed throughout the Northeast.
Four existing bank charters will consolidate into a single Massachusetts state-chartered bank. Brookline Bank will serve as the consolidated entity’s banking charter.
The transaction has been unanimously approved by the boards of directors of both companies.
Subject to customary conditions, including required regulatory and shareholders’ approvals, the merger is anticipated to be completed in the second half of 2025.
For the transaction, Raymond James & Associates served as exclusive financial adviser to Berkshire Hills while Luse Gorman served as the company’s legal counsel.
Hovde Group acted as exclusive financial adviser to Brookline Bancorp and Goodwin Procter served as its legal counsel.
