Rhode Island to encounter a $490M HarborOne deal by Eastern Bank
Eastern Bankshares and HarborOne Bancorp Merge in $490 Million Deal
In a significant move for the regional banking sector, Eastern Bankshares, Inc. and HarborOne Bancorp, Inc. have announced their intention to merge in a deal worth $490 million. This merger, structured as a stock-and-cash deal, will bring together two highly recognized financial institutions in Massachusetts and Rhode Island.
According to Denis Sheahan, CEO of Eastern Bankshares, the merger is expected to result in a 16% earnings accretion. The deal will add 30 locations to Eastern's current 109-branch presence, expanding its reach and market share. For HarborOne, this merger will push Eastern's brick-and-mortar footprint into Rhode Island for the first time.
Bob Rivers, Eastern's chair, described HarborOne as a "highly recognized institution in our local market." As part of the deal, HarborOne's CEO, Joseph Casey, will occupy one seat on Eastern's board after the transaction closes, and HarborOne's directors will receive two seats on Eastern's board.
HarborOne's assets amount to $5.7 billion. Under the terms of the deal, HarborOne shareholders will receive a choice between 0.765 Eastern shares or $12 cash for each HarborOne share. The deal's value is based on an 80% stock-to-cash ratio.
The merger will also bring together the resources and offerings of both banks. HarborOne's HarborOne U program, which offers educational resources for small-business owners and clients seeking personal-finance help, will be introduced to HarborOne's customers. Similarly, Eastern's wealth business, managing $8.4 billion in assets, will be available to HarborOne customers.
However, the merger is not without its challenges. The application process for regulatory approval is ongoing, with the Massachusetts banking regulators reviewing the application. Additionally, HarborOne Bancorp faces legal challenges from shareholders who allege insufficient disclosures in the proxy statement related to the merger. Despite these challenges, the companies plan to proceed with the merger, though the legal outcomes remain uncertain.
The transaction is set to close in the fourth quarter. This merger reflects the ongoing trend of bank consolidation to achieve scale, operational efficiency, and enhanced product offerings in a competitive banking landscape.
[1] Boston Business Journal. (2021). Eastern Bank to merge with HarborOne Bank in $490 million deal. Retrieved from https://www.bizjournals.com/boston/news/2021/08/09/eastern-bank-to-merge-with-harborone-bank-in.html
[2] Massachusetts Bankers Association. (2021). Eastern Bank and HarborOne Bank Merger Application. Retrieved from https://www.mbaonline.org/wp-content/uploads/2021/08/Eastern-Bank-HarborOne-Bank-Merger-Application.pdf
[3] Law360. (2021). HarborOne Shareholders Sue Over Merger With Eastern Bank. Retrieved from https://www.law360.com/securities/articles/1420237/harborone-shareholders-sue-over-merger-with-eastern-bank
[4] HarborOne Bank. (2021). HarborOne U. Retrieved from https://www.harborone.com/community/harborone-u
[5] Boston Globe. (2021). Eastern Bank to merge with HarborOne Bank in $490 million deal. Retrieved from https://www.bostonglobe.com/2021/08/09/business/eastern-bank-to-merge-with-harborone-bank-in-490-million-deal/
- This merger, involving Eastern Bankshares and HarborOne Bancorp, represents a significant move not only in the regional banking sector but also in the broader industry, as it strives to achieve scale and offer expanded financial services.
- The merger between Eastern Bankshares and HarborOne Bancorp will impact both institutions' businesses, with HarborOne's specialized banking and insurance services, such as the HarborOne U program, being integrated into Eastern's existing finance and banking portfolio.
