Bank of Boston Corp.'s decision to buy BankWorcester Corp. is being lauded as a savvy deal - even though the buyer may be required to divest some of BankWorcester's riches to satisfy regulators.

Bank of Boston said Tuesday night that it plans to buy the thrift holding company for $276 million in cash, or about 1.7 times the thrift's book value.

The deal to buy the $1.4 billion-asset thrift will give Bank of Boston the lead retail market position in Worcester, New England's second-largest city, and in Worcester County.

A Reply to Shawmut

It also responds to a move from Bank of Boston's competitor, which just last month laid claim to dominance in central Massachusetts by announcing plans to buy Peoples Bancorp of Worcestor, a thrift holding company with $913 million of assets.

Bank of Boston is New England's second-largest bank company and Shawmut is the third largest.

Analysts said the Bank of Boston's move is strategically sound and-since the thrift will be bought for cash-good for investors, whose shares will not be diluted.

But some analysts said Bank of Boston will almost certainly have to divest some of BankWorcester's $1.2 billion in deposits to avoid violating anti-trust law.

The BankWorcester deal will give Bank of Boston about 22% of the retail deposit market in Worcester County, according to Stanley T. Wells, who follows New England thrifts from the Hartford office of Keefe, Bruyette & Woods Inc.

Deposit Sale Possible

Ira Stepanian, chairman and chief executive of Bank off Boston, said in an interview Wednesday that some deposits may indeed have to be sold -- particularly because Bank of Boston just completed the purchase of another holding company, Multibank Financial Corp., which owns a Worcester County bank.

"We've taken it all into account, but it is not going to be significant," Mr. Stepanian said.

Bankers and analysts both agreed that the deal makes sense financially for Bank of Boston.

The company said it can shave expenses at Bank Worcester by about 40% pretax, balancing the $100 million of intangibles that will be added to Bank of Boston's balance sheet because of the cash deal. BankWorcester had core annual expenses of $38 million last year.

Goodwill Amortization

Analysts said Bank of Boston will amortize its goodwill from the purchase at a fairly insignificant number of about $6 million a year.

"The numbers make good sense as a cash deal," said Jeffrey L. Cohn, an analyst at H.C. Wainwright & Co. in Boston.

In late trading Wednesday, Bank of Boston's shares were up 25 cents to $4.50 a share. BankWorcester climbed $2.875 to $31.375 a share.

BankWorcester agreed to sell itself in 1990 to Rhode Island-based Citizens Financial Group, but the deal fell apart because of poor credit quality that Citizens discovered at the Massachusetts thrift.

Rumors of another sale of BankWorcester resurfaced in past few months. Sources said Fleet Financial Group recently offered to pay $32 a share in stock for the thrift.

Inevitable Trend

BankWorcester chairman Harold Cabot would not comment directly on the bidding, but said he initiated merger talks with Bank of Boston as he watched the trend of small banks succumbing to larger ones snowball.

"As a board, we knew we couldn't change the tide and we felt there was no sense in swimming against it," he said.

Shareholders of BankWorcester, will receive $34 for each of their shares, according to the deal's terms.

Mr. Stepanian said the purchase will be made by Bank of Boston's lead bank, the First National Bank of Boston, which will not need to raise additional cash to do the deal.

The transaction will be slightly dilutive to Bank of Boston's earnings this year and slightly accretive next year, he said.

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