Independent Bank to acquire Meridian Bancorp in $1.15B deal

Rockland, Mass.-based Independent Bank Corp. and Peabody, Mass.-based Meridian Bancorp Inc. have signed a definitive merger agreement for Independent to acquire Meridian and for Independent unit Rockland Trust Co. to acquire Meridian unit East Boston Savings Bank in a transaction valued at approximately $1.15 billion.

Under the terms of the merger agreement, each Meridian stockholder will receive 0.2750 of a share of Independent common stock for each share of Meridian common stock. Independent Bank expects to issue about 14.2 million common shares in the merger.

The transaction value is based upon Independent Bank's $79.57 per share closing price as of April 21, and the aggregate consideration represents 150% of Meridian's tangible book value.

At announcement, S&P Global Market Intelligence calculates the deal value to be 149.17% of common equity, 153.57% of tangible common equity and 16.96x earnings. The deal value is also 17.34% of assets and 22.59% of deposits, and the tangible book premium-to-core deposits ratio is 9.13%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Northeast region between April 22, 2020, and April 22, 2021, averaged 129.32% of book and 154.57% of tangible book and had a median of 22.70x last-12-months earnings, on an aggregate basis, and averaged 127.26% of book and 152.13% of tangible book and had a median of 21.46x last-12-months earnings, on a per-share basis.

The merger is expected to close in the fourth quarter subject to customary closing conditions, including regulatory approvals, as well as approvals of Meridian and Independent shareholders.

Independent Bank expects the transaction to be roughly 7.9% immediately accretive to tangible book value per share and about 23% accretive to its 2022 earnings per share, assuming fully phased-in cost saves, and to generate an internal rate of return of almost 16%. Combined merger-related charges are expected to be approximately $64 million before tax, in the aggregate, incurred in 2021.

Meridian's directors and executive officers who currently own an aggregate of about 3.5% of Meridian's outstanding shares have signed voting agreements in which they have agreed to vote their shares in favor of the merger.

The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes and to provide a tax-free exchange for Meridian stockholders for the Independent common stock consideration they receive.

East Boston Savings Bank operates from 42 full-service locations, one mobile branch and three loan centers in the Greater Boston area. As of March 31, Meridian had $6.5 billion in total assets, $5.3 billion in loans and $5.1 billion in deposits. Rockland will have approximately $20 billion in assets following the close of the merger, according to an Independent Bank news release.

Based on S&P Global Market Intelligence data, with the completion of the deal, Independent Bank will expand in Suffolk County, Mass., by 23 branches to be ranked eighth with a 1.31% share of approximately $274.63 billion in total market deposits, will expand in Middlesex County, Mass., by 10 branches to be ranked No. 14 with a 1.91% share of about $74.69 billion in total market deposits and will expand in Norfolk County, Mass., by three branches to be ranked third with a 6.31% share of roughly $33.41 billion in total market deposits. Additionally, Independent Bank will enter Essex County, Mass., with seven branches to be ranked eighth with a 5.55% share of approximately $29.33 billion in total market deposits.

Keefe Bruyette & Woods served as financial adviser to Independent, and Wachtell Lipton Rosen & Katz served as legal counsel. Raymond James & Associates Inc. acted as financial adviser to Meridian, and Luse Gorman PC served as legal counsel.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.