Massachusetts' Safety Fund Corp. Finds a White Knight from N.H.

In a move designed to blunt merger entreaties from one bank, Massachusetts' Safety Fund Corp. has agreed to sell out to another.

CFX Corp., Keene, N.H., is buying Safety Fund for about $43.4 million in stock, creating a $1.2 billion-asset company.

Under the deal, Fitchburg-based Safety Fund would operate as a separate subsidiary of $879 million-asset CFX The transaction is expected to be completed in the second half of the year.

To protect the deal, the board of $293 million-asset Safety Fund also approved a shareholder rights plan, which would be exercised if any firm besides CFX gains control of at least 15% of the company's stock.

But the deal might already face opposition from David G. Massad, chairman and controlling shareholder of Commerce Bank and Trust Co. of Worcester.

Mr. Massad, a Worcester car dealer who already owns 9.9% of Safety Fund stock and has proposed in the past that it merge with Commerce, received permission from the Federal Reserve Bank of Boston on Jan. 19 to acquire up to 51% of Safety Fund, effectively buying the bank.

In fact, his initial application to the Federal Reserve prompted Safety Fund to seek a buyer, according to Mark Gavin, CFX chief financial officer.

"If someone was going to buy the stock of Safety Fund, they wanted to make sure that whoever was going to buy it would pay a fair price," Mr. Gavin said.

Reached on Friday, Mr. Massad criticized the merger and said he is considering his options, but declined to elaborate.

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