Berkshire Hills Bancorp, Inc. (AMEX: BHL), the holding company for Berkshire Bank in Pittsfield, Mass., has agreed to purchase Woronoco Bancorp, Inc. (AMEX: WRO), the holding company for Woronoco Savings Bank, including the bank’s two insurance agencies.
Headquartered in Westfield, Mass., Woronoco Savings Bank had assets of approximately $898.5 million at September 30, 2004 and operates 10 banking offices and two insurance agency offices in Hampden and Hampshire counties in western Massachusetts.
The combined institution will serve customers through a network of 22 full-service branches in western Massachusetts and New York, having total assets of approximately $2.0 billion. As a result, Berkshire Bank said it will be the fourth largest publicly traded bank headquartered in Massachusetts and the largest headquartered in the western part of the state. Berkshire Hills and Woronoco will merge operations and existing Woronoco Savings Bank branches will become branches of Berkshire Bank.
The Woronoco Insurance Group operates two full-service insurance offices in Westfield and Longmeadow under Paul Lesukoski, president, and Evan Mattson, vice president. The agencies are Keyes, Mattson & Agan and the Colton Agency.
Michael P. Daly will be president and chief executive officer of both Berkshire Hills and Berkshire Bank and the headquarters will remain in Pittsfield. Lawrence A. Bossidy will be chairman of the board of directors of the combined companies. Cornelius D. Mahoney, chairman, president and chief executive officer of Woronoco and Woronoco Savings Bank, and two other Woronoco directors, will join the boards of directors of Berkshire Hills and Berkshire Bank when the merger is completed.
Based upon Berkshire Hills’ closing price of $37.00 on December 16, 2004, the transaction is valued at $36.75 per share, or approximately $144.5 million in the aggregate.
The purchase price represents 172.7 percent of Woronoco’s tangible book value, 23.1 times Woronoco’s trailing 12 months earnings and a 19.0 percent premium to core deposits.
Commenting on the merger, Daly said, “This transaction meets all of the criteria we have recently articulated that must be present for us to do a significant acquisition: it is accretive to earnings in one of the contiguous regions of western Massachusetts, New York, Connecticut or Vermont, and Woronoco complements our community banking strengths. Woronoco is a quality institution with a strong consumer base, significant business and wealth management growth opportunities, and a low risk profile. Woronoco’s insurance group will give us a platform to provide quality insurance products to Berkshire Bank customers. In combination with Berkshire Bank’s strong commercial base, wealth management, trust services, and government banking services, the combined institution will be a formidable commercial and community banking franchise, with significant non-interest income potential, management synergies, and solid asset quality.”
The merger is subject to approval by state and federal regulatory agencies and the stockholders of both companies. The parties anticipate that the transaction will close in the second quarter of 2005. Northeast Capital & Advisory, Inc. served as the financial advisor for Berkshire Hills, and Sandler O’Neill & Partners, L.P. advised Woronoco. Wachtell, Lipton, Rosen & Katz served as outside legal counsel to Berkshire Hills, while Muldoon Murphy Faucette & Aguggia LLP served as outside legal counsel to Woronoco.
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