People’s United Plunges After Agreeing to Buy Danvers Bancorp
People’s United Financial Inc., the Bridgeport, Connecticut-based bank that made four acquisitions last year, plunged the most since April 2009 after announcing plans to buy Danvers Bancorp.
The shares dropped 60 cents, or 4.4 percent, to $13.09 at 10:02 a.m. New York time. The stock has fallen 21 percent in the past 12 months, making it the worst performer among 24 companies in the KBW Bank Stock Index.
People’s, led by Chief Executive Officer John P. Barnes, said yesterday it agreed to acquire Danvers and its 28 branches in Massachusetts for about $493 million in cash and stock. The deal values Danvers at about 1.6 times book value, or assets minus liabilities. That compares with a median multiple of 1.25 times book value for acquisitions of U.S. banks since the start of 2010, according to data compiled by Bloomberg.
Danvers, based in the Massachusetts city of the same name, “is a high-quality commercial institution that offers an excellent platform for growth and is a natural extension of our brand,” Barnes said in a statement announcing the deal.
People’s simultaneously disclosed that fourth-quarter net income increased to $32 million from $24.9 million in the year- earlier period. Earnings per share equaled the 9-cent average estimate of 17 analysts surveyed by Bloomberg.
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