PITTSFIELD, Mass. and
WORCESTER, Mass., May 22, 2017 /PRNewswire/ -- Berkshire Hills
Bancorp, Inc. (NYSE: BHLB) and Commerce Bancshares
Corp. (Private; "Commerce") announced today that they have signed a
definitive merger agreement under which Berkshire will acquire Commerce and its
subsidiary, Commerce Bank and Trust ("Commerce Bank"), in an
all-stock transaction valued at $209
million.
Berkshire's total assets are
expected to increase to $12 billion
including the $2.2 billion in
acquired Commerce assets. Commerce reported $1.5 billion in loans and $2.0 billion in deposits as of March 31, 2017. This in-footprint
merger includes thirteen branches in the Worcester area and three branches in
Boston and provides the catalyst
for Berkshire to move its
corporate headquarters to Boston.
"We're pleased to welcome Commerce Bank customers and employees
to America's Most Exciting Bank®," said Michael P. Daly, Chief Executive Officer of
Berkshire. "With the addition of the Commerce team, we will
be able to leverage the strengths of both banks and capitalize on
growth opportunities in the attractive, high-growth Central and
Eastern Massachusetts
markets. We'll also further solidify our Boston presence by moving our corporate
headquarters into the heart of Boston. Our partnership with
Commerce Bank provides us with the catalyst to not only be the
largest regional bank headquartered in Boston, but to also be the first regional bank
in two decades to have downtown headquarters. This paves the
way for significant opportunities ahead to attract talent and
capitalize on our previous Eastern
Massachusetts growth and the strong Commerce core banking
franchise."
David G. "Duddie" Massad, Commerce's Chairman of the Board,
commented, "We're excited to be joining the Berkshire family. The strategic fit
between the two organizations provides significant opportunities
for our customers and communities. Our valued customers will
benefit from the enhanced balance sheet strength and broader array
of products and services offered by Berkshire, while our employees continue to
provide the level of service our Worcester and Boston clients have come to expect. I'm
confident that this partnership will reflect the values and talents
of both organizations."
TRANSACTION SUMMARY
Following are selected terms and metrics associated with the
transaction based upon current projections (all metrics are
inclusive of increased regulatory burden associated with crossing
$10B in assets):
- Total transaction value: $209
million
- Price to March 31, 2017 book
value: 129%
- Price to March 31, 2017 tangible
book value: 138%
- Tangible book value dilution of $0.15 per share or 0.7% with expected 1.0 year
earn-back period using the Crossover Method and the Simple
Method
- Anticipated to be 4-5% accretive to earnings per share in 2018
before transaction costs
- Core deposit premium: 3.0%
- Targeted cost saves: 20%
Upon completion of the transaction, this combination will allow
Berkshire to fully absorb the
earnings impacts associated with crossing $10 billion in assets, while providing modest
accretion for shareholders.
TERMS OF THE AGREEMENT
Under the terms of the merger agreement, each outstanding share
of Commerce common stock will be exchanged for 0.93 shares of
Berkshire Hills common stock. To the extent any Commerce
shareholder would own in excess of 9.9% of outstanding Berkshire common stock as of the closing of
the merger, that shareholder would receive the economic equivalent
in Berkshire Hills non-voting preferred shares for the amount over
9.9%.
LEADERSHIP
Two Commerce board members are expected to join Berkshire's board upon the completion of the
transaction. In addition, Commerce Bank's Chief Executive
Officer, Brian W. Thompson, along
with Chief Operating Officer, Michael J.
Crawford, will serve as advisors to Berkshire and liaisons to the local
community. Key senior executives from Commerce Bank 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 Commerce 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 Commerce's
shareholders, as well as state and federal regulatory
agencies. The merger is targeted to be completed in six to
nine months. References to corporate headquarters refer to
the executive offices of Berkshire Hills Bancorp. The
relocation of the bank's main office is subject to regulatory
approval.
ADVISORS
Berkshire Hills was advised by J.P. Morgan Securities LLC and
legal counsel was provided by Luse Gorman,
PC; Commerce was advised by Sandler O'Neill & Partners,
L.P., and legal counsel was provided by Nutter McClennen & Fish
LLP and Fletcher Tilton
PC.
INVESTOR PRESENTATION AND CONFERENCE CALL
Berkshire will conduct a
conference call/webcast at 10:00 a.m.
eastern time on Monday, May 22,
2017 to discuss the acquisition of Commerce. Participants
should pre-register for the conference call using the following
link: dpregister.com/10107989.
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).
ABOUT BERKSHIRE
HILLS
Berkshire Hills Bancorp is the parent of Berkshire Bank –
America's Most Exciting Bank®. Berkshire has approximately $9.3 billion in assets and 97 full-service branch
offices in Massachusetts,
New York, Connecticut, Vermont, Pennsylvania and New
Jersey providing personal and business banking, insurance,
and wealth management services. The Company also offers
mortgages and specialized commercial lending services in targeted
national markets. For more information, visit
www.berkshirebank.com.
ABOUT COMMERCE BANK
Commerce Bank, headquartered in Worcester, Massachusetts, was founded in 1955
and acquired in 1993 by David "Duddie" Massad. Serving as a
community bank in the Worcester
and Boston areas, Commerce has
approximately $2.2 billion in assets
and 16 branches. Commerce offers middle-market lending,
specialty finance services, and maintains relationships with
multiple Payroll Service Bureau customers. For more
information, visit www.bankatcommerce.com.
FORWARD LOOKING STATEMENTS
This document contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
about the proposed merger of Berkshire and Commerce. These statements
include statements regarding the anticipated closing date of the
transaction and anticipated future results. Forward-looking
statements can be identified by the fact that they do not relate
strictly to historical or current facts. They often include words
like "believe," "expect," "anticipate," "estimate," and "intend" or
future or conditional verbs such as "will," "would," "should,"
"could" or "may." Certain factors that could cause actual results
to differ materially from expected results include delays in
completing the merger, difficulties in achieving cost savings from
the merger or in achieving such cost savings within the expected
time frame, difficulties in integrating Berkshire and Commerce, increased competitive
pressures, changes in the interest rate environment, changes in
general economic conditions, legislative and regulatory changes
that adversely affect the business in which Berkshire and Commerce are engaged, changes in
the securities markets and other risks and uncertainties disclosed
from time to time in documents that Berkshire files with the Securities and
Exchange Commission.
NON-GAAP FINANCIAL MEASURES
This document references non-GAAP financial measures
incorporating tangible equity and related measures, as well as core
deposits. These measures are commonly used by investors in
evaluating business combinations and financial condition.
The calculation of tangible book value dilution includes
transaction costs related to the business combination, including
professional fees, severance, contract terminations, systems
conversion costs, and other one-time costs of the
transaction. These costs are subtracted from equity as if
they are all recorded by Berkshire
at the time the merger is completed. These adjustments are
stated net of a tax benefit based on the estimated tax
deductibility of the projected costs.
Transaction costs are not included in references related to
earnings, including references to earnings accretion, the payback
period for dilution to tangible book value, and cost save
estimates. The Company estimates that transaction costs will
total $32 million pre-tax. It
is presently undetermined as to which of these transactions costs
will be recorded by Berkshire and
which will be recorded by Commerce. Accordingly, the Company
is presently unable to estimate GAAP earnings related measures.
Non-GAAP measures are not a substitute for GAAP measures; they
should be read and used in conjunction with the Company's GAAP
financial information. In all cases, it should be understood that
non-GAAP per share measures do not depict amounts that accrue
directly to the benefit of shareholders.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger, Berkshire will file with the Securities and
Exchange Commission ("SEC") a Registration Statement on Form S-4
that will include a Proxy Statement of Commerce and a Prospectus of
Berkshire, as well as other
relevant documents concerning the proposed merger. Investors and
stockholders are urged to read the Registration Statement and the
Proxy Statement/Prospectus regarding the proposed merger when it
becomes available and any other relevant documents filed with the
SEC, as well as any amendments or supplements to those documents,
because they will contain important information. A free copy of the
Registration Statement and Proxy Statement/Prospectus, as well as
other filings containing information about Berkshire and Commerce, when they become
available, may be obtained at the SEC's Internet site
(www.sec.gov). Copies of the Registration Statement and Proxy
Statement/Prospectus (when they become available) and the filings
that will be incorporated by reference therein may also be
obtained, free of charge, from Berkshire's website at ir.berkshirebank.com or
by contacting Berkshire Investor Relations at 413-236-3149 or
William Burke at Commerce at
508-797-6996.
PARTICIPANTS IN SOLICITATION
Berkshire and Commerce and
certain of their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
stockholders of Commerce in connection with the proposed merger.
Information about the directors and executive officers of
Berkshire is set forth in the
proxy statement for Berkshire's
2017 annual meeting of stockholders, as filed with the SEC on a
Schedule 14A on April 7, 2017.
Information about the directors and executive officers of Commerce
will be set forth in the Proxy Statement/Prospectus.
Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction and a description of their direct and indirect
interests, by security holdings or otherwise, may be obtained by
reading the Proxy Statement/Prospectus and other relevant documents
regarding the proposed merger to be filed with the SEC (when they
become available). Free copies of these documents may be obtained
as described in the preceding paragraph.
CONTACTS
Investor Relations Contact:
Allison O'Rourke; Executive Vice
President, Investor Relations Officer; 413-236-3149
Media Contact:
Elizabeth Mach; Senior Vice
President, Marketing Officer; 413-445-8390
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/berkshire-hills-to-acquire-commerce-bancshares-300461309.html
SOURCE Berkshire Hills Bancorp, Inc.