CFX Corp. said it would buy Milford Co-Operative Bank, Milford, N.H., for about $26.5 million in stock.

The acquisition would satisfy $901 million-asset CFX's goal of increasing its presence in Hillsborough County, the state's largest and most attractive banking county.

The deal would give CFX $1.35 billion in assets and 41 branches in New Hampshire and Massachusetts.

Officials expect a 30% cost reduction from the deal.

Under terms of the deal, each share of Milford stock would be converted into between 2.61 and 2.70 shares of CFX stock, depending on the average price of CFX stock in the 10 trading days immediately before the last regulatory approval is granted.

The agreement provides for $154 million-asset Milford to be merged into CFX's New Hampshire subsidiary, CFX Bank.

The transaction, which would be tax-free to Milford shareholders, is still subject to shareholder and regulatory approval and is expected to close in the second half.

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