FIRSTFED America Bancorp, Inc. To Acquire People's Bancshares, Inc.
SWANSEA, Mass., Oct. 1 /PRNewswire/ -- FIRSTFED AMERICA BANCORP, INC. (``FIRSTFED,'' Amex: FAB), and People's Bancshares, Inc. (``People's,'' Nasdaq: PBKB), New Bedford, Massachusetts, jointly announced today that they have signed a definitive agreement pursuant to which FIRSTFED will acquire People's for approximately $72 million in cash and stock. The transaction will increase FIRSTFED's assets from $1.7 billion as of June 30, 2001 to approximately $2.7 billion, increase its number of banking offices from 15 to 27, and increase its number of loan origination centers from 5 to 15.
Robert F. Stoico, Chairman, President and Chief Executive Officer of FIRSTFED stated, ``We are very pleased to announce our proposed acquisition of People's Bancshares, Inc. This merger represents a natural extension of our franchise and will give us the largest deposit market share among community banks in Bristol County, Massachusetts. When combined with our on-going expansion in Rhode Island, the transaction further solidifies FIRSTFED's position as one of the region's premier community banks.''
``We believe that this transaction is an excellent opportunity for our shareholders and our customers,'' said Richard S. Straczynski, President and Chief Executive Officer of People's. ``Our commitments to maximizing shareholder value and to preserving the community bank quality of service we have offered to People's customers will be met by this merger. People's customers will benefit from the addition of the extensive network of FIRSTFED offices and ATM's, and they will have access to a greater selection of services including trust and asset management services, as well as a full array of insurance products.''
The merger is expected to be completed in the first quarter of 2002. Upon consummation of the merger, former shareholders of People's will own approximately 23% of FIRSTFED's outstanding shares. To the extent they receive FIRSTFED shares, the transaction is expected to be tax-free to People's shareholders.
FIRSTFED expects to recognize savings in the range of 20-25% of People's consolidated expenses by the end of 2002 and also expects the merger to be accretive to earnings per share in the first year after the merger is completed. FIRSTFED's management team and Board of Directors will remain intact following the merger. One member of People's board of directors will be added to the board of directors of FIRSTFED and First Federal Savings Bank of America.
Terms of the Merger
Under the terms of the merger agreement, People's stockholders can elect to receive either 1.2644 shares of FIRSTFED common stock (and cash in lieu of any fractional share) or $22.00 in cash for each share of People's common stock they own. The elections of People's shareholders will be subject to the requirement that 55% of People's shares be exchanged for cash and 45% be exchanged for FIRSTFED common stock.
People's can terminate the merger agreement should FIRSTFED common stock decline in value by more than certain percentages during a specified measurement period, provided that FIRSTFED can require People's to proceed with the transaction by increasing the exchange ratio to a specified level. Should the value of FIRSTFED common stock increase by more than 20%, the value of FIRSTFED shares to be exchanged for People's shares would be capped at $26.40.
The merger is subject to certain conditions, including the approval of the shareholders and regulators of both companies.
In connection with the agreement, People's granted to FIRSTFED an option to purchase up to 19.9% of People's common stock subject to certain terms and conditions.
Pricing Summary
Price to normalized trailing 4Q earnings 11.0 x
Price to 6/30/01 book value 216%
Premium to 9/28/01 People's market price 60%
Premium to 6/30/01 deposits 6.7% |
