2 New England Banking Firms Agree to Merge
Shawmut Corp. of Boston and Hartford, Conn.-based Hartford National Corp. have agreed to merge in a stock swap that will create a new $25-billion bank holding company, the companies announced Wednesday.
The transaction was the latest in a recent series of mergers designed to create “super-regional” bank holding companies with the resources to compete with giant money center banks as interstate banking barriers continue to erode.
The two companies agreed to merge into a new entity, Shawmut National Corp. It will rank as the nation’s 21st-largest bank holding company.
Hartford National shareholders will receive one Shawmut National share for each of their common shares, and Shawmut shareholders will get 1.8 Shawmut National shares. The merger is subject to approval by banking regulators and shareholders of the two companies.
Hartford National stock fell $2 to $29.12 a share, and Shawmut rose $3.87 to $50.12 in national over-the-counter trading Wednesday.
Based on its 40.5 million common shares outstanding, Hartford National had a market value of about $1.18 billion at Wednesday’s closing price. Shawmut, with about 16.1 million outstanding common shares, had a market value of about $807 million.
Joint Headquarters
Shawmut, with $10 billion in assets, has 15 commercial banking subsidiaries and 15 additional subsidiary and affiliate companies with offices in 42 cities in the United States, London and Hong Kong.
Hartford National, with $14 billion in assets, is the holding company for Connecticut National Bank, its principal subsidiary, and eight other banks in Connecticut, Massachusetts and Rhode Island. It also has a New England banking franchise of 250 offices.
The new company will maintain joint headquarters in Boston and Hartford.
Under the merger, the chief executives of the two companies will retain control of the new company, with Shawmut’s John P. LaWare serving as chairman and Hartford’s Joel B. Alvord serving as president and chief executive.
“With our increased size, improved service capability and economies resulting from our union, Shawmut National Corp. will be structured and poised to take maximum advantage of banking and non-banking opportunities as they emerge,” LaWare and Alvord said in a joint statement.
Earlier this month, two major super-regionals were created from mergers. First Fidelity Bancorp. of New Jersey merged with Philadelphia’s Fidelcor Inc. in a $1.34-billion stock-swap merger.
In addition, Pittsburgh-based PNC Financial Corp. announced an agreement to acquire Central Bancorp. of Cincinnati in an all-stock deal valued at about $719 million.
In March, Fleet Financial Group of Providence, R.I., and Norstar Bancorp of Albany, N.Y., agreed to merge in a stock swap valued at about $1.3 billion.
