Bank holding company People’s United Financial, Inc. has reached an agreement to buy Danvers Bancorp for $493 million, The Associated Press reports.
People’s United said in a statement Thursday that the purchase of the parent company to Danversbank, which is based in Danvers, Mass., will be made in a 55 percent stock and 45 percent cash transaction.
The deal, which is subject to regulatory and shareholder approval was announced on the same day that People’s Bank posted a 31 percent increase in fourth-quarter operating earnings of $36.7 million, or 10 cents a share, compared with $28 million, or 8 cents a share, a year earlier.
People’s United Financial CEO Jack Barnes said the deal will make People’s United the seventh largest bank in the greater Boston area.
People’s United said the transaction should be immediately accretive to its operating earnings with an internal rate of return greater than 15 percent. The transaction is expected to close late in the second quarter of 2011.
Under the terms of the agreement Danvers Bancorp shareholders can choose to receive either $23.00 in cash or 1.624 shares of People’s United Financial stock for each Danvers Bancorp share. The transaction is valued at $23 per Danvers Bancorp share, based on the average closing price of People’s United for the 10-day period ended January 19.
The deal has been approved by both companies’ boards of directors.
Shares of People’s United fell 26 cents, or nearly 2 percent, to close at $13.69. They fell another 29 cents after hours.
