Berkshire Hills Bancorp in Boston has agreed to buy Brookline Bancorp in Boston.
The $11.6 billion-asset Berkshire said in a press release that it will pay $1.1 billion in stock for the $11.7 billion-asset Brookline. The deal is expected to close in the second half of next year. Berkshire shareholders will own 51.2% of the company, though Brookline will be the accounting acquirer.
Berkshire also plans to sell $100 million of common stock at $29 a share in an offering expected to close on Thursday. Proceeds are expected to support the combined bank’s balance sheet and regulatory capital ratios.
“The combined organization will be in an even stronger position to deliver exceptional client experience and create greater value for shareholders,” Nitin Mhatre, Berkshire’s president and CEO, said in the press release.
The board will be evenly split between Berkshire and Brookline directors. David Brunelle, Berkshire’s chairman, will chair the board.
Paul Perrault, Brookline’s chairman and CEO, will become Berkshires president and CEO. Carl Carlson, Brookline’s c0-president and chief financial and strategy officer, will become chief financial and strategy officer. Michael McCurdy, co-president and chief operating officer, will serve as chief banking officer.
Berkshire expects to cut 12.6% of the combined bank’s annual operating costs to lower its efficiency ratio to 48% in 2026. The company plans to incur $93 million of merger-related charges.
The deal should be 40% accretive to 2026 earnings per share. It should take less than three years to earn back any dilution to Berkshire’s tangible book value.
Berkshire will rebrand under an as-yet-to-be-determined name and stock symbol. The combined bank will be divided into six regions, each with its own president. The four existing bank charters will be consolidated into a single Massachusetts state charter under a new brand.
Raymond James and Luse Gorman advised Berkshire. Hovde Group and Goodwin Procter advised Brookline. Kilpatrick Townsend & Stockton advised the investment banks on the private placement.