Another Brooklyn Thrift in Deal To Buy Bay Ridge for $140M; 40% Premium

Ending months of speculation that it was up for sale, Brooklyn's Bay Ridge Bancorp has agreed to be acquired by a neighboring mutual holding company.

Independence Community Bank Corp., parent of Brooklyn's Independence Savings Bank, is to buy Bay Ridge for $22 a share in cash.

The stock is currently trading at $20.125, near its all-time high

With about 6.5 million shares of Bay Ridge stock outstanding, that's a total deal value of $140 million, or 1.4 times the thrift's book value.

Orin S. Kramer, general partner at Boston Provident Partners, an institutional investment firm that has followed Bay Ridge, was struck by the amount Independence was willing to pay for the institution.

"They paid a price that no company accountable to shareholders would have been able to pay without suffering retribution from those shareholders," Mr. Kramer said. "If there is a CEO of a publicly traded financial institution who would have paid $22 a share, I haven't met him."

In the letter of intent, Bay Ridge also granted the $2.6 billion-asset Independence an option to buy 661,000 shares of its stock if the deal doesn't go through.

The merger, which is subject to shareholder and regulatory approval, is expected to be completed in the fourth quarter, possibly in November, according to Charles J. Hamm, president and chief executive of Independence.

The merger will guarantee that Bay Ridge's customers will still be served by an institution familiar with local conditions, while providing more services and products, said Donald A. Cordano, president and chief executive of $588 million-asset Bay Ridge.

It will also help Independence fill in its network in Brooklyn, where Bay Ridge maintains six branches, and fulfills the company's goal of efficient and careful expansion, Mr. Hamm said.

Independence currently has 22 branches - in Brooklyn, Queens, Manhattan, and Nassau County on Long Island.

"Their chain of branches falls right between two of our clusters," Mr. Hamm said. "We basically solidify a major presence in south Brooklyn."

The cash acquisition would bring Independence's capital ratio down to 6.5%, but Mr. Hamm said officials plan to raise it back up to its current 9.5% through earnings retention before looking for future growth.

The deal follows several months of speculation about a pending acquisition of Bay Ridge. The stock price and trading volume suddenly surged in late last December and rumors at the time cited Independence as one of the likely buyers.

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