Item 1.01
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Entry into Material Definitive Agreement
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Merger Agreement
On April 7, 2021, Century Bancorp, Inc. (“Century”), the holding company of Century Bank and Trust Company, and Eastern Bankshares, Inc. (“Eastern”), the holding company of Eastern Bank, entered into an Agreement and Plan of Merger by and among Eastern, Clarion Acquisition Corp. (the “Merger Sub”), Century, and Century Bank and Trust Company (the “Merger Agreement”). Pursuant to the Merger Agreement, Century will merge with and into the Merger Sub, with Century as the surviving entity (the “Merger”). Immediately after the Merger, Century will merge with and into Eastern, with Eastern as the surviving entity (the “Holdco Merger”). It is anticipated that immediately following the Holdco Merger, Century Bank and Trust Company will merge with and into Eastern Bank, with Eastern Bank as the surviving bank. The Merger Agreement has been unanimously approved by the Boards of Directors of each of Century and Eastern.
Under the terms of the Merger Agreement, at the effective time of the Merger, (i) each holder of Century Class A common stock will receive a cash payment of $115.28 per share of Century Class A common stock and (ii) each holder of Century Class B common stock will receive a cash payment of $115.28 per share of Century Class B common stock.
The Merger Agreement contains customary representations, warranties and covenants of Century and Eastern, including, among others, covenants relating to the conduct of Century’s business during the period between the execution of the Merger Agreement and the consummation of the Merger. The various representations, warranties and covenants that Century and Eastern made to each other as of specific dates. The assertions embodied in those representations, warranties and covenants contained in the Merger Agreement were made solely for purposes of the contract between Century and Eastern, are solely for the benefit of the parties to the Merger Agreement, are not intended as statements of fact to be relied upon by shareholders of Century, and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement. Moreover, the representations and warranties are subject to a contractual standard of materiality that may be different from what may be viewed as material to shareholders, and the representations and warranties may have been used to allocate risk between Century and Eastern rather than establishing matters as facts.
The Merger Agreement provides each of Century and Eastern with certain termination rights. If the Merger is not consummated under specified circumstances, including if Century or Eastern terminates the Merger Agreement under certain circumstances and Century enters into an alternative merger transaction within 12 months of the termination, Century has agreed to pay Eastern a termination fee in the amount of approximately $25.7 million.
The consummation of the Merger is subject to customary closing conditions, including the receipt of regulatory approval and Century shareholder approval. The affirmative vote of the holders of a majority of Century’s Class A common stock and Century Class B common stock, voting separately by class, is required to approve the Merger Agreement. The approval of Eastern’s shareholders is not required. The Merger is currently expected to be completed during the fourth quarter of 2021.
The foregoing summary of the Merger Agreement is not complete and is qualified in its entirety by reference to the complete text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and which is incorporated by reference in its entirety
Voting Agreements
Simultaneously with the execution of the Merger Agreement, Century’s directors and executive officers and certain of their affiliates have entered into voting agreements with Eastern to vote in favor of the Merger Agreement (collectively, the “Voting Agreements”) at special meeting of Century’s shareholders to be held for such purpose. In the aggregate, Century’s shareholders who have entered into the Voting Agreements control the right to vote 2.5% of the Class A common stock and 93.2% of the Class B common stock. The Voting Agreements terminate upon the termination of the Merger Agreement in accordance with their respective terms.