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SHAWMUT NATIONAL AGREES TO ACQUIRE GATEWAY FINANCIAL IN STOCK DEAL VALUED AT $152 MILLION

 HARTFORD, Conn., and BOSTON, Nov. 5 /PRNewswire/ -- Shawmut National Corporation (NYSE: SNC) and Gateway Financial Corporation (NASDQ: GTWY) today announced that Shawmut had signed a definitive agreement to acquire Gateway in a fixed stock-for-stock exchange of 0.559 of a share of Shawmut common stock for each Gateway share. The 0.559 exchange ratio equates to a value of $11.32 per Gateway share based on Thursday's closing price of $20.25 for Shawmut common stock, representing an aggregate transaction value of $152 million.
 The agreement allows Gateway to terminate the transaction in the event that the average price of Shawmut stock during a 10-day period preceding the receipt of all regulatory approvals falls below $18.70 a share and Shawmut elects not to preserve the transaction's value by increasing the exchange ratio.
 Gateway Financial, the Norwalk, Conn.-based parent of Gateway Bank, has total assets of $1.3 billion and 28 banking offices in Fairfield County, Conn.
 Joel B. Alvord, chairman and chief executive officer of Shawmut, said, "Gateway fits precisely into our strategy of strengthening the Shawmut franchise through selective acquisitions in key markets like Fairfield County. The Gateway acquisition will give Shawmut the largest market share of any commercial bank in Fairfield County, one of the most affluent counties in the nation."
 Shawmut presently is number four in bank deposit market share in Fairfield County, with 7.5 percent of the market. The merger with Gateway will boost that market share to 16.5 percent.
 Alvord added, "For Gateway customers, Shawmut will offer the added convenience of New England's leading consumer banking network and a wide array of investment products and services."
 Reginald DeKoven, president and chief executive officer of Gateway, stated, "The combination with Shawmut will bring substantial benefits for our shareholders and our customers. Gateway has made tremendous strides this year in returning our bank to financial strength and profitability. Our combination with Shawmut will provide our shareholders with the opportunity for further long-term growth and profitability, while providing our customers with access to the leading Connecticut banking franchise."
 The purchase price represents 174 percent of Gateway's book value of $87.5 million on Sept. 30, 1993.
 Shawmut National expects to realize cost savings of 65 percent, or about $25 million, of Gateway's non-interest expenses through the elimination of overlapping operations and 20 branches. Shawmut expects the acquisition will increase earnings per share in 1995. The transaction will be treated as a pooling of interests for accounting purposes and is expected to be tax-free exchange to Gateway shareholders.
 The transaction, which is subject to regulatory approvals, is expected to close in the first half of 1994. Upon completion of the transaction, Gateway Bank will be merged into Shawmut Bank Connecticut, the state's largest bank.
 In connection with the transaction, Gateway granted Shawmut an option to acquire up to 19.9 percent of Gateway's outstanding shares stock at $10.75 per share upon the occurrence of certain events.
 Shawmut National also has pending agreements to acquire New Dartmouth Bank of Manchester, N.H., and Peoples Bancorp of Worcester Inc., headquartered in Worcester, Mass.
 Shawmut National Corporation had total assets of $26.9 billion on Sept. 30, 1993 and over 300 branches in Massachusetts, Connecticut, and Rhode Island. Shawmut is a leading provider of financial services to consumers and small- to medium-sized businesses in southern New England. The corporation maintains dual headquarters in Hartford and Boston.
 -0- 11/5/93
 /CONTACT: Robert L. Guenther, 203-240-1267 (media); or Thomas R. Rice, 203-728-4872 (investor), both of Shawmut/
 (SNC GTWY)


CO: Shawmut National Corporation; Gateway Financial Corporation ST: Massachusetts, Connecticut IN: FIN SU: TNM

CM -- NE001 -- 1099 11/05/93 08:47 EST
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Publication:PR Newswire
Date:Nov 5, 1993
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