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Independent Bank Corp. INDB has entered into an agreement to acquire Blue Hills Bancorp, Inc. BHBK, for $726.5 million. Moreover, Independent Bank’s subsidiary, Rockland Trust Company, will buy Blue Hills Bancorp’s subsidiary Blue Hills Bank.
The merger, already approved by the board of directors of both companies, is expected to conclude by first-half 2019. This stock-cum-cash transaction still awaits approval of shareholders of both companies as well as regulatory authorities.
Nonetheless, Independent Bank’s shares have lost 2.3% since the announcement of the merger on Sep 20.
Details & Benefits
Per the agreement, Independent Bank will pay 0.2308 of a share of its common stock and $5.25 in cash for each share of Blue Hills. This will result in issuance of 6.2 million new shares for Independent Bank. The total deal value of $726.5 million is based on Independent Bank’s share price of $89.35 as on Sep 19.
Independent Bank expects the acquisition to be around 4% accretive to its 2019 earnings per share (EPS) and around 4.5% to the company’s 2020 EPS. Further, the investment’s prospective internal rate of return has been calculated at approximately 16%. Moreover, management does not expect this transaction to affect tangible book value per share.
Independent Bank’s subsidiary, Rockland, is in the mid of acquiring The Milford National Bank & Trust Company. After completion of this acquisition by the end of 2018, the company’s assets are projected to be more than $11 billion. Further, the transaction will enable Rockland to have the largest deposit share in Massachusetts.
The agreement to acquire Blue Hills is in line with Independent Bank’s strategy of growing inorganically in overlapping and adjacent markets. The transaction will likely solidify the company’s share in Eastern Massachusetts. In addition, this will aid the company’s expansion in the Nantucket Island, indicating decent long-term growth prospects.
Independent Bank stock has outperformed its industry over the past year. Its shares have gained 20.8% over the past year compared to the industry’s growth of 2.1%.
Independent Bank currently carries a Zacks Rank #3 (Hold).
Stocks Worth a Look
Among other banks in the same industry, First Mid-Illinois Bancshares, Inc. FMBH and MB Financial Inc. MBFI are worth considering. While First Mid-Illinois flaunts a Zacks Rank of 1 (Strong Buy), MB Financial carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the last 60 days, the Zacks Consensus Estimate for First Mid-Illinois’ current-year earnings has moved 3.7% north. Its share price has gained 12.8% in the past year.
MB Financial’s earnings estimates for 2018 remained unchanged over the past 60 days. Its shares have rallied 11.3% in a year’s time.
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MB Financial Inc. (MBFI) : Free Stock Analysis Report
First Mid-Illinois Bancshares, Inc. (FMBH) : Free Stock Analysis Report
Independent Bank Corp. (INDB) : Free Stock Analysis Report
Blue Hills Bancorp, Inc. (BHBK) : Free Stock Analysis Report
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