Hartford, Conn.-based United Financial Bancorp Inc.'s board discussed the benefits of a potential business combination, including a potential transaction with Bridgeport, Conn.-based People's United Financial Inc., way back in early 2018.
But in February, United Financial's independent directors came to a consensus not to pursue a strategic combination at that time.
People's United was still interested in pursuing a business combination.
Then on May 13, discussions were held at United Financial about management's expectations for the company's future financial performance, among other things.
The following day, United Financial's board authorized senior management and financial adviser Sandler O'Neill & Partners LP to solicit preliminary indications of interest regarding a potential deal from five financial institutions identified by Sandler O'Neill, including People's United.
People's United confirmed its potential interest, and another financial institution expressed potential interest but could not offer an acquisition premium. The other three institutions indicated that they did not have an interest in a transaction with United Financial at that time. United Financial's board decided to recommence exploratory discussions with People's United.
On May 28, People's United offered to acquire United Financial in a merger at a proposed exchange ratio of 0.91 of a People's United common share for each United Financial common share.
A month later, People's United revised its exchange ratio proposal to 0.875, in light of the results of its due diligence review of United Financial. Concerns about the credit quality of United Financial's loan portfolio were cited. People's United had revised its previous assumptions regarding United Financial's business and increased the amount of noncore loans that People's United planned to run off during the two years following deal completion.
In July, People's United was asked to increase its proposed exchange ratio. It declined to do so.
United Financial's board on July 11 held a special meeting to review the merger agreement and the proposed transaction with an exchange ratio of 0.875. It authorized senior management to continue negotiations with People's United.
The two companies executed and announced the merger agreement on July 15.
United Financial would pay People's United a termination fee of about $28.3 million should the deal fall through under certain circumstances.