Eastern in Boston returned to the table to strike deal for HarborOne
When Eastern Bankshares in Boston first approached HarborOne Bancorp in Brockton, Mass., last fall, it was just one of many conversations that HarborOne had fielded over the years. But what began as an informal interest quickly turned into a carefully choreographed courtship — one that would test both companies’ resolve over months of talks, market volatility, and multiple revised bids.
The $25 billion-asset Eastern agreed in April to buy the $5.7 billion-asset HarborOne for $490 million in a deal expected to close in the fourth quarter.
At the heart of the deal was Eastern’s ambition to extend its footprint into Rhode Island and deepen its presence in southeastern Massachusetts. The HarborOne board had long kept the door open to strategic alternatives that could boost shareholder value.
The timing finally aligned.
The companies began serious discussions last September, when HarborOne President and CEO Joseph Casey met with Eastern’s top leadership, including Chairman Bob Rivers and CEO Denis Sheahan, according to a regulatory filing tied to the pending merger. On Jan. 31, Eastern submitted a nonbinding all-stock offer that valued HarborOne at $14.87 to $15.23 a share, or roughly $647 million to $663 million, and included two board seats.
But the deal would not be sealed so quickly.
After beginning formal due diligence in February, Eastern’s investment banker signaled that the bank would likely lower its offer. Eastern, on March 7, reduced its offer to $12.17 a share, or $529.3 million — a 20% decline from the original indication of interest.
Three days later, the companies “agreed to put negotiations about a potential transaction on hold due [to] the volatility in the market,” the filing said. They formally terminated the confidentiality agreement and the exclusivity agreement.
Eastern wasn’t done. Within weeks, it re-engaged, offering 0.765 shares of its common stock for each HarborOne share. HarborOne pushed for a better exchange ratio and a shift to a partially cash-based deal — leading to an agreement that involved 70% stock and a valuation of $12 a share, or about $522 million.
The deal was approved by HarborOne’s board on April 24, and the deal was announced later that day. It priced HarborOne at 100% of its tangible book value.
“We are excited about this partnership, which bolsters our already strong and long-standing presence in Greater Boston and expands our footprint into Rhode Island,” Rivers said in a press release announcing the deal. “HarborOne is a highly recognized institution in our local market, and we share a deep commitment to customers, colleagues and communities.”
Casey and one other director will join Eastern’s board.
The deal is expected to be 16% accretive to Eastern’s 2026 earnings per share. It should take less than three years to earn back an estimated 7% dilution to Eastern’s tangible book value.
Eastern plans to cut about 40% of HarborOne’s annual noninterest expense, or $55 million, while incurring $65 million of merger-related expenses.
Eastern plans to sell HarborOne’s securities and pay down FHLB borrowings. About 5% of non-brokered deposits are expected to run off. About $6 million of annual interchange fees are expected to be lost due to the Durbin Amendment.