Fleet Financial Group to acquire NBB Bancorp
Fleet Financial Group, New England’s largest bank has agreed to purchase NBB Bancorp for $420 million in warrants, stock and cash. NBB is the parent company of Massachusetts’ largest savings bank.
In recent years the financial institutions of New England have been hit hard by losses in real estate loans and a sagging regional economy. The proposed transaction signals a recovery to some analysts. NBB’s sale is also a sign of the increasing difficulty midsize banks have competing with larger commercial banks.
NBB and Fleet both expect the transaction to close in 1995, depending on shareholder and regulatory approval. In the transaction, Fleet will give each NBB shareholder either Fleet stock worth $48.50 per share or $48.50 per NBB share. Instead of diluting stock value by issuing new shares for the deal, Fleet will repurchase about 6 million common shares and issue them to NBB shareholders.
The purchase price per share is valued at about $50.50 per share by NBB. That total estimate is 15 times NBB’s 1993 earnings and 168 percent of its book value (as of March 31, 1994). Even held against that measure, many analysts feel the price is too low. NBB and Fleet signed a tentative agreement late on May 8.
Fleet plans to increase the financial services available to NBB’s former customers, adding such items as credit cards and mutual funds to the bare bones deposit and mortgage lending NBB currently offers.
Copyright Quality Services Company May 17, 1994
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