People’s United Financial in Bridgeport, Conn., has agreed to buy United Financial Bancorp in Hartford, Conn.
The $48.1 billion-asset People’s United said in a press release Monday that it will pay $759 million in stock for the $7.3 billion-asset United Financial. The deal, which is expected to close in the fourth quarter, priced United at 135% of its tangible book value.
It is the fifth-biggest bank M&A deal announced this year.
United has 59 branches, $5.8 billion in loans and $5.7 billion in deposits.
“With the fourth-largest deposit market share in the combined Hartford and Springfield market, a complementary array of commercial and retail capabilities and a shared legacy of community giving, United will solidify our presence in the central Connecticut market and strengthen our franchise in western Massachusetts,” Jack Barnes, People’s United’s chairman and CEO, said in the release.
People’s United said it expects the transaction to be 5% accretive to its earnings per share, including fully phased-in cost savings. It should take slightly more than two years to earn back any expected dilution to People’s United’s tangible book value.
People’s United said it expects to incur $126 million in merger-related expenses. It plans to cut 55% of United’s annual noninterest expenses, or roughly $88 million.
People’s United said it plans to let $1.8 billion of United’s loans run off. It also plans to sell $556 million in investment securities as part of a balance sheet restructuring.
Keefe, Bruyette & Woods and Simpson Thacher & Bartlett advised People’s United. Sandler O’Neill and Sullivan & Cromwell advised United.
