Connecticut Bank Buys out Danversbank for nearly $500 million

February 3, 2011
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Danversbank has announced that they will be bought out by People’s United Bank of Bridgeport, CT, for a cash and stock deal worth $493 million.

The deal is still pending approvals, but is expected to be successful.

Danversbank has local branches on Broadway in Revere, in Linden Square and on Broadway in Chelsea. Danversbank came to the area exactly 10 years ago when they bought out Revere Federal Savings Bank – which was headed up by Jim McCarthy, who is still with Danversbank.

The buy-out will mean a new name on the front of the local bank, but other than that officials expected few changes to customer service employees.

“We would expect a lot of the customer facing people will survive the transaction, and that some of the backroom and administrative people will not survive because that infrastructure is already in place at People’s” said Mark Panella, chief financial officer of Danversbank. “I will not survive the transaction, for example, just because there’s no need for two CFOs. That’s sort of how it goes in these things.”

People’s United, which has a large footprint in Connecticut and other New England states, has been on an aggressive bank-buying mission over the past couple of years. They have grown rapidly.

They indicated in a press release that the purchase of Danversbank puts them into the Boston market.

“We are pleased that Danversbank has chosen to grow with People’s United Bank,” said Jack Barnes, President and Chief Executive Officer of People’s United Financial. “Danversbank, combined with our existing Massachusetts presence, makes People’s United – New England’s largest independent bank – the seventh largest bank both in Massachusetts and in the Boston area. Danversbank is a high-quality commercial institution that offers an excellent platform for growth and is a natural extension of our brand. It complements our continuous footprint from Worcester, in central Massachusetts, through Boston and on into New Hampshire.”

Interestingly enough, Barnes is originally from Beverly and knows the North Shore well.

People’s United is a much bigger bank, with an estimated $25 billion in assets. Meanwhile, Danversbank lists a total of $2.6 million in assets.

Danversbank CEO Kevin Bottomley said the upgrade would benefit everyone. Bottomley will join the People’s United Board of Directors as part of the deal.

Panella said that they believe People’s is using Danversbank as their first major platform in the lucrative Boston banking market. By doing so, he said it would mean they would want to keep many of the employees who are already on the ground.

“We anticipate that we are, in effect, the platform for their real entrance of the Massachusetts market and, more importantly, the Greater Boston market because we have a large and extremely experienced cadre of commercial and industrial lenders,” he said. “It’s really the commercial and industrial small business lending piece that is important. That can’t be successful for you if you let everyone go.”

He said they also believe People’s to have much the same mandate as Danversbank.

“The company’s that come in and acquire everything and then tear it apart don’t usually find success,” he said. “We don’t believe People’s to be that type of company, especially since at the end of the day they’re a very large community bank…Even at $25 billion [in assets], People’s is big, but they’re not staggering.”

Over the last several years, Danversbank has reported a steady stream of new clients and continuous growth, making one wonder why they would sell.

Panella said that the bank was doing well, but because it was a publicly traded company, they had to entertain good offers for the sake of their shareholders. He said that after three years, a publicly traded company loses its protection from buyout offers and, at that point, has to listen.

“We are beyond that three-year protection and we were compelled to listen and be good listeners,” he said. “If they offer a big number you can’t casually dismiss it. You are now owned by the shareholders. If you don’t want to be in that position, you don’t go public.”

Danversbank went public on Jan. 9, 2008.

The nuts and bolts of the deal include a purchase that entails 55 percent stock and 45 percent cash. Danversbank shareholders can elect to receive either $23 per share in cash or 1.624 shares of People’s United stock for each Danversbank share. The receipt of People’s stock by Danversbank shareholders is expected to be tax-free.

The deal is to officially close in the second quarter of 2011.


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