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Independent Bank (INDB) Completes Acquisition of Blue Hills

Zacks Equity Research

Independent Bank Corp. INDB recently completed the acquisition of Blue Hills Bancorp in a stock-cash deal worth $726.5 million. Per the terms, Blue Hills will merge with and into Independent Bank. Also, subsidiaries of both the companies will combine with Rockland Trust, Independent Bank’s subsidiary, the surviving entity.

The transaction, announced in September 2018, received all necessary regulatory approvals in March 2019.

Per the deal terms, Independent Bank will pay 0.2308 of each 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 and nearly $167.4 million in cash payment.

Independent Bank expects the acquisition to be around 4% accretive to earnings in 2019 and nearly 4.5% to that in 2020. The investment’s prospective internal rate of return has been calculated at roughly 16%. Management does not expect this transaction to affect tangible book value per share.

Prior to this buyout, Independent Bank closed the cash and stock deal to acquire MNB Bancorp for $55.5 million in November 2018. The transaction is anticipated to be accretive to 2019 earnings by 10 cents. Also, the company projected the deal to generate an internal rate of return of 19%.

With the acquisition of Blue Hills, Independent Bank has strengthened its position in Eastern Massachusetts. We believe opportunistic buyouts will continue to be part of the company’s growth strategy.

Shares of Independent Bank have gained 17% over the past year.

Independent Bank Corp. Price

Independent Bank Corp. Price | Independent Bank Corp. Quote

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space are Bank OZK OZK, Byline Bancorp BY and Midland States Bancorp MSBI. All these stocks carry a Zacks Rank #2 (Buy).

Bank OZK’s Zacks Consensus Estimate for current-year earnings has been revised nearly 1% upward in the past 60 days. Also, its share price has increased 27.2% in the past three months.

Byline Bancorp’s current-year earnings estimates have been revised slightly upward over the past 60 days. Further, the company’s shares have jumped 12.8% in the past three months.

Midland States’ Zacks Consensus Estimate for current-year earnings has remained stable over the past 60 days. Moreover, in the past three months, its shares have gained 10%.

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