Independent Bank (INDB), parent of Rockland Trust and Blue Hills Bancorp (BHBK) have signed a definitive merger agreement for Independent to acquire Blue Hills Bancorp and Rockland Trust to acquire Blue Hills Bank. The merger agreement provides that each Blue Hills Bancorp stockholder will receive 0.2308 of a share of Independent common stock and $5.25 in cash for each share of Blue Hills Bancorp common stock. The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes and to provide a tax-free exchange for Blue Hills Bancorp stockholders for the Independent common stock portion of the consideration they receive. The agreement provides that, effective as of and contingent upon the merger, Independent will add three Blue Hills Bancorp directors to its board of directors. As of June 30, Blue Hills Bancorp had $2.7B in total assets, $2.3B in loans, and $2.1B in deposits. Rockland Trust and Blue Hills Bank anticipate that their transaction will close in the first half of 2019. After the Blue Hills Bank merger and the closing of Rockland Trust's previously announced acquisition of The Milford National Bank & Trust Company, which is anticipated in Q4, Rockland Trust will have over $11B in assets and the largest Massachusetts deposit share and most bank branches of any bank headquartered in Massachusetts. The Blue Hills Bank merger is anticipated to give Rockland Trust, which in 2017 expanded onto Martha's Vineyard with the acquisition of The Edgartown National Bank, a Nantucket Island presence and the number one deposit market share in Nantucket County. Rockland Trust is also projected to have the number three deposit market share in Norfolk County following the Blue Hills Bank merger. Independent anticipates issuing approximately 6.2M shares of its common stock in the merger. Based upon Independent's $89.35 per share closing price on September 19, the transaction is valued at approximately $726.5M and the aggregate consideration represents 178% of Blue Hills Bancorp's current tangible book value.Independent anticipates that the acquisition will be approximately 4% accretive to its 2019 EPS, excluding one-time costs; and the acquisition will be approximately 4.5% accretive to 2020 EPS. Independent estimates that the transaction will generate an internal rate of return of about 16% and expects the transaction will be neutral to tangible book value per share. Merger related charges are expected to be approximately $36M before tax, in the aggregate, incurred in 2018 and 2019. The boards of directors of each company have unanimously approved the transaction. The transaction is subject to certain conditions, including the receipt of required regulatory approvals, approval by the stockholders of both Blue Hills Bancorp and Independent, and other standard conditions. Blue Hills Bancorp's directors and officers who currently own, in the aggregate, about 4.4% of Blue Hills Bancorp's outstanding shares have signed voting agreements pursuant to which they have agreed to vote their shares in favor of the merger.
