Thailand Financial News

People’s United Financial, Inc. (NASDAQ:PBCT) , the holding company for People’s United Bank, has announced a definitive agreement to acquire Chittenden Corporation (NYSE:CHZ) in a stock and cash transaction valued at $1.9 billion. Consummation of the agreement is subject to the approval of the shareholders of Chittenden, as well as various regulatory agencies.

The acquisition is expected to close in the first quarter of 2008.

“We are delighted that Chittenden Corporation is joining People’s United Bank as we combine two high-performing banks with similar balance sheets, management styles and cultures to create the premier regional banking franchise in New England,” said John Klein, chairman, president and chief executive officer of People’s United Bank. “This transaction delivers on key commitments we made to investors in the course of our second-step conversion. We promised to make acquisitions in contiguous or near-contiguous markets; acquire banks with similar balance sheets and operating models to ours; and undertake a transaction that is accretive to EPS and has an internal rate of return that exceeds our cost of capital,” Klein said. “The combination of these two great banks does all this and more.” “People’s United Bank, like Chittenden Corporation, has a deep and long- standing commitment to its customers, employees and communities,” said Paul Perrault, chairman, president and chief executive officer of Chittenden Corporation. “Indeed, our banks share the same philosophy and cultures. We both believe that — to drive shareholder value — we must provide an exceptional customer experience. Our structure of separate local community banks in New England is one that is admired by People’s United and will continue. Chittenden Corporation will be provided with two board seats and I will become a member of the executive team helping drive the integration of the two institutions. We couldn’t have found a better partner. This union will allow us to continue providing current and future customers with a superior experience and even more convenience across New England from their local bank.” The acquisition partially leverages proceeds from the $3.44 billion second-step conversion that People’s United Financial completed in April. The purchase price is approximately $1.9 billion, of which approximately 55% is in cash and 45% in People’s United Financial stock. Under the terms of the definitive agreement, which has been unanimously approved by both companies’ board of directors, at closing Chittenden Corporation shareholders will have the right, subject to proration, to elect to receive cash or People’s United common stock, in either case having a value equal to $20.35 plus the product of .8775 times the average closing price of People’s United shares for the five day period prior to the closing. Based on the average closing price of People’s United for the three day period ending June 25, 2007, the transaction is valued at $37.00 per Chittenden Corporation share. The actual per share value on consummation of the acquisition will depend on the share price of People’s United at that time. The total transaction value of approximately $1.9 billion includes approximately $1 billion in cash. The cash consideration will be funded through internal resources. The receipt of People’s United stock by shareholders of Chittenden will be tax-free. People’s United expects the transaction to be immediately accretive to earnings and to have an IRR of approximately 13%. The transaction is expected to close in the first quarter of 2008 and is subject to approvals by regulators and Chittenden Corporation’s shareholders. People’s United Bank currently operates 160 branches, 75 of which offer seven-day banking in Super Stop & Shop locations across Connecticut. Chittenden currently has 133 branches in New England through six bank subsidiaries. The combined company will have assets of approximately $22 billion. Morgan Stanley acted as financial advisor to People’s United and Cleary Gottlieb Steen & Hamilton LLP and Thacher Proffitt & Wood LLP acted as legal counsel. Lehman Brothers Inc. and J.P. Morgan Securities Inc. acted as financial advisor to Chittenden Corporation and Goodwin Procter LLP served as legal counsel. — www.theasianbanker.com (June 28 2007)–