News
December 12, 2018Berkshire Hills to Acquire SI Financial Group
Berkshire Hills Bancorp, Inc. (NYSE: BHLB) (“Berkshire”) and SI Financial Group, Inc. (NASDAQ: SIFI) (“SIFI”) announced today that they have signed a definitive merger agreement under which Berkshire will acquire SIFI and its subsidiary, Savings Institute Bank and Trust Company (“Savings Institute”), in an all-stock transaction valued at $180 million based on Berkshire’s stock price as of the close of business on December 10, 2018.
Berkshire’s total assets will increase to $13.6 billion including the $1.6 billion in acquired SIFI assets. SIFI reported $1.3 billion in loans and $1.3 billion in deposits as of September 30, 2018. This merger agreement increases Berkshire’s market presence with 18 branches in Eastern CT and 5 branches in Rhode Island, adding to Berkshire’s existing 9 Connecticut branches.
“We’re pleased to welcome Savings Institute’s customers and employees to the Berkshire family,” said Richard M. Marotta, Chief Executive Officer of Berkshire. “This transaction is a natural fit and brings with it a stable, longstanding deposit base with leading market position. The Savings Institute franchise strengthens our Northeast presence, as we gain scale in Connecticut and enter into attractive Rhode Island markets. Savings Institute is a well-established and trusted financial institution with deep client and community relationships. We look forward to expanding those relationships with the depth and breadth of our products and services. This partnership will produce attractive returns for both our existing shareholders and the new shareholders from SIFI joining us in this transaction.”
“We’re excited to be joining with a successful regional bank that shares our commitment to community and customer service,” commented Rheo A. Brouillard, President and Chief Executive Officer of SIFI. “Like Savings Institute, Berkshire Bank was established in the mid to late 1800s and has grown over the years as a result of that commitment. The combination of our two banks will provide greater convenience and a broader array of products to our customers who will continue to have the personalized service they have come to expect.”
TRANSACTION SUMMARY
Under the terms of the merger agreement, each outstanding share of SIFI common stock will be exchanged for 0.48 shares of Berkshire Hills common stock. Upon closing, any outstanding SIFI options will be vested and converted into Berkshire options.
Following are selected transaction terms and metrics based upon current projections:
- Total transaction value: $180 million
- Price to September 30, 2018 tangible book value: 118%
- Tangible book value dilution of $0.53 per share or 2.4% with an expected less than 3.0 year earn-back period
- Anticipated to be 5% accretive to earnings per share in 2020, the first full year of integrated operations
- Core deposit premium: 2.6%
- Targeted cost saves: 30%
LEADERSHIP
Under the agreement, SIFI’s President and Chief Executive Officer, Rheo A. Brouillard, will be appointed to Berkshire’s Board of Directors when the merger is completed. Key business leaders from SIFI will remain with Berkshire Bank in continuing leadership roles.
APPROVALS
The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes, and as a result, the shares of SIFI stock exchanged for shares of Berkshire stock are expected to be transferred on a tax-free basis. The definitive agreement has been approved by the unanimous votes of the Boards of Directors of both companies. Consummation of the agreement is subject to the approval of SIFI’s shareholders, as well as state and federal regulatory agencies. The merger is targeted to be completed in the second quarter of 2019.
ADVISORS
Berkshire was advised by Piper Jaffray & Co. and legal counsel was provided by Luse Gorman, PC; SIFI was advised by Keefe, Bruyette & Woods, Inc., and legal counsel was provided by Kilpatrick Townsend & Stockton LLP.
INVESTOR PRESENTATION AND CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Wednesday, December 12, 2018 to discuss the acquisition of SIFI. Participants should pre-register for the conference call using the following link: http://dpregister.com/10127087.
Participants may also reach the registration link and access the webcast by logging in through the investor section of Berkshire’s website at ir.berkshirebank.com. Those parties who do not have internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) call. The recorded webcast will be available on Berkshire’s website for an extended period of time.
A copy of the investor presentation will be made available prior to the call on Berkshire’s website (ir.berkshirebank.com).
