And the winner is … the lower bidder?

The bidding war for CNB Financial Corp in Pittsfield, Mass., bumped the price up 9%, but the $297 million-asset company chose not to go with the highest offer.

CNB announced at the end of last month that it would sell itself to Berkshire Hills Bancorp Inc. in Pittsfield for roughly $19.5 million, or $8.50 a share, in stock. On May 13, United Financial Bancorp Inc. in West Springfield made an unsolicited offer of $22.8 million, or $10 a share. Half of the price would be paid in stock and half in cash.

Ultimately, CNB decided to go with its first suitor. It said last week that it was sticking with Berkshire after it increased its offer to $9.23 a share, or 106% of CNB's tangible book value.

"In reviewing the United proposal, the CNB board acknowledged that the United proposal currently has a higher nominal value than the revised Berkshire transaction," CNB said in announcing its decision.

CNB, Berkshire and United had returned calls for comment by press time Friday.

In its announcement, CNB said its board based its decision on two factors. United's offer is at a fixed price, whereas Berkshire's offer could increase with the price of the company's stock. Also, United's deal was contingent on conducting due diligence.

"These factors created significant uncertainty as to whether CNB would be able to reach a definitive agreement with United at the value stated in United's proposal," CNB said.

Analysts have said that CNB would be a great purchase for either of the interested acquirers, because its six-branch network is contiguous to theirs, and both would gain entry into Worcester, one of the most populous cities in New England.

Gray Medlin, the managing director in the Raleigh office of the investment banking firm Carson Medlin Co., called the CNB board's stock-appreciation argument for accepting the lower offer unusual, but he also said that it made sense.

Typically, companies go for the highest price, but the biggest factor in this decision was likely the fact that United's offer was contingent on due diligence, he said.

"When I first started doing the bank mergers back in the '80s, you announced the deal with a letter of intent subject to due diligence, and a lot of us learned the hard way that wasn't the best way," Medlin said. "A lot of buyers used due diligence to work the price down, and once they had you public, the seller didn't have a lot of bargaining power to resist the buyer using due diligence to lower the price. We stopped announcing deals with letters of intent and didn't announce anything until a letter of agreement was signed without due diligence in them."

The Berkshire-CNB deal is scheduled to close next quarter and is subject to shareholder approval.

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