Eastern Bankshares, the stock holding company for Eastern Bank, and Century Bancorp, the stock holding company for Century Bank and Trust Company, entered into a definitive all-cash merger agreement with an aggregate transaction value of $642 million. This in-market transaction comes fewer than six months after Eastern’s initial public offering, which raised approximately $1.7 billion in equity capital.
Under terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, Century shareholders will receive $115.28 in cash for each share of Century common stock they own.
The acquisition is expected to close in Q4/21, subject to certain conditions, including the receipt of required regulatory approvals, shareholder approval and other standard conditions.
Century’s directors and executive officers and certain of their affiliates agreed to vote in favor of the merger. Upon closing, Eastern Bankshares intends to merge Century Bancorp into Eastern Bankshares, with Eastern continuing as the surviving entity. Concurrently, Eastern Bankshares will merge Century Bank into Eastern Bank and convert Century customers to the Eastern platform, with Century Bank branches assuming the Eastern Bank name.
“We’ve admired Century’s success since its founding by Marshall Sloane in 1969 and today they are New England’s largest family-run bank. Under the leadership of Barry R. Sloane and Linda Sloane Kay, the Century Bank brand has continued to rise in prominence and it was a proud moment for us when they communicated they wanted to partner with Eastern,” Bob Rivers, CEO and chair of the board of Eastern Bankshares and Eastern Bank, said. “We are excited for the opportunities this agreement creates and believe our combination will deepen our reach in providing banking services and other support to communities across Greater Boston and southern New Hampshire.”
“Our complementary business models and shared values make this partnership a natural fit,” Barry R. Sloane, chairman, president and CEO of Century Bank, said. “Both organizations are highly respected as leaders in the community, and we believe Eastern’s focus on innovation and technology will help to further ensure Century customers have greater access to banking products and services that meet their needs where and when they need them.”
The $642 million purchase price represents 1.75 times Century’s tangible book value as of Dec. 31, 2020. Eastern expects the transaction to be approximately 55% accretive to earnings on a fully synergized basis and to have an IRR of approximately 17%. Eastern will fund the purchase price with cash on hand from its balance sheet.
Eastern also announced a 33% increase to its quarterly dividend to $0.08 per share as part of its overall capital management strategy.
“Our pro forma capital levels remain robust post-merger and we remain ready to continue to strategically deploy our capital and deliver shareholder value,” Rivers said. “The increase in our dividend, which was initiated just last quarter, is further evidence of that commitment.”
Eastern has approximately $16 billion in assets and Century Bank has $6.4 billion in assets.
J.P. Morgan Securities served as financial advisor and Nutter McClennen & Fish provided legal counsel to Eastern. Piper Sandler served as financial advisor and Goodwin Procter provided legal counsel to Century.