Independent Bank (INDB) To Acquire MNB Bancorp For $54.2M
Zacks Investment Research | May 30, 2018 08:54AM ET
Independent Bank Corp. (NASDAQ:INDB) has entered into an agreement with MNB Bancorp to acquire the latter. While the agreement has been approved by the board of directors of the companies, the closing of the transaction (anticipated in the fourth quarter of 2018) is subject to certain regulatory approvals.
Independent Bank is the parent company of Rockland Trust Company, and MNB Bancorp is the parent of The Milford National Bank and Trust Company. Per the agreement, Rockland Trust will also acquire Milford National.
Terms of the Deal
Based on the closing price of Independent Bank’s shares on May 25, the deal value comes at $54.2 million.
According to the terms of the transaction, each of MNB Bancorp’s shareholders will either receive 3.55 shares of Independent Bank or $275 in cash. Notably, this is subject to a pro-ration procedure, which results in a consideration mix of 75% stock and 25% cash.
Per Independent Bank, it will have to issue nearly 528,375 shares for the merger. The remaining cash consideration is anticipated to be funded from internal sources.
For the merger, one-time expenses of nearly $5.3 million, after tax, are expected to be incurred in 2018 and 2019. Excluding the one-time costs, the transaction is expected to be accretive to Independent Bank’s earnings in 2019 by 10 cents.
Independent Bank projects the transaction to generate an internal rate of return (IRR) of 19%. It expects the transaction to be dilutive to its tangible book value per share by 1.2%.
Notably, for federal income tax purposes, the transaction will be tax-free. Also, it will provide a tax-free exchange for the stockholders of MNB Bancorp with shares of Independent Bank.
Founded in 1849, Milford National offers a full array of personal banking, business banking, investments and trust services. The bank operates through three branches at Worcester County, MA, of which two are in Milford and one is in the adjacent community of Mendon.
As of Mar 31, 2018, Milford National’s deposit balances were $301 million while its loans totaled $308 million. Moreover, the company’s wealth management business had $167 million of assets under administration as of the same date.
Christopher Oddleifson, the president and CEO of Independent Bank said, “Rockland Trust already has a Milford presence with many customer relationships in Milford and the surrounding area. This acquisition is a natural expansion and strengthening of our existing presence in Milford and Worcester County. We look forward to welcoming Milford National colleagues and customers to Rockland Trust.”
Shares of Independent Bank have gained 26.6% in the past year, outperforming 8.6% growth recorded by the Original post
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