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Eastern Bank Chairman and CEO Bob Rivers began his quest to acquire Century Bank less than a week after Eastern Bank went public in October, according to a new SEC filing, while Century sought other bidders, including one New England bank that remained in the mix until a month before the Eastern deal was announced.
Century had received calls from other financial institutions in the New England region about combining with Century throughout 2020 and 2021, according to Century’s preliminary proxy statement filed with the SEC, which describes nearly six months of interactions leading to the deal with Eastern Bank.
Rivers called Sloane on Oct. 20, the week after Eastern converted to a stock bank on Oct. 14. But his first offer was rejected.
When Rivers asked Sloane if he would be interested in discussing a cash acquisition in the range of 150 percent of Century’s tangible book value, Sloane said Eastern would need to propose a higher price to warrant further discussions. The price worked out to about $97 per share.
Rivers called Sloane back at the end of November proposing a transaction price of 170 percent of Century’s tangible book value, which equaled about $110 per share.
The proxy does not reveal Sloane’s reaction to that price, but over the next couple of months, Century Bank contacted three other banks to see if they would be interested in a deal.
Sloane called the CEO of one of those banks, described in the proxy as an active buyer in the New England market and referred to as “Company A,” and asked the CEO if he would be interested in discussing a deal.
Company A’s CEO called Sloane on Dec. 15 and said Company A would be willing to pursue an acquisition of Century at $110 per share.
Around that same time, Sloane called the CEO of another bank, also described as an active buyer in the New England market. That CEO called Sloane back on Dec. 24 but did not pursue a deal and had no further communications with Century about the matter.
After Century Bank brought on Piper Sandler in January to help negotiate an acquisition, a representative from Piper Sandler in early February called the CEO of another bank about a deal but there were no further communications about a deal with that bank.
Century’s board had authorized Sloane in January to continuing discussing a deal with Company A and Eastern Bank. Company A in early February then increased its offer, saying it would be willing to pursue an acquisition of Century for a price of $112 per share, up from $110. But a month later, Company A dropped out.
Century had met with the management teams of both banks vying for a deal, and on March 3, “Company A indicated that it would decline to submit an expression of interest citing a lack of strategic alignment between the two companies,” the proxy said.
Eastern Bank proposed acquiring Century on March 8 for $112.25 per share in cash. Even though only Eastern Bank remained as a bidder, there was “intensive negotiation between the parties regarding deal pricing.” On March 12, Eastern revised its proposal, offering to acquire Century’s outstanding common stock for $115.28 per share in cash. The deal was finalized after the close of the market on April 7.
One reason Century went ahead with the deal was the reduced volatility associated with a cash transaction, according the proxy. The bank also considered the prospect that Century’s employees would get jobs in the combined company, as well as Eastern’s historically strong financial condition and operating results.
Century also considered its future, citing challenges associated with continuing to operate as an independent bank, including competition from other financial institutions, margin compression due to the low interest rate environment and rising continuing escalation of compliance costs.
