Webster Financial Corp., Waterbury, Conn., has signed a definitive agreement to acquire Shelton Bancorp in a stock exchange valued at $29.4 million, or $21.85 a share.
By terms of the agreement, shareholders of Shelton will get 0.92 of a share of Webster common stock in a tax-free exchange for each of their shares. The exchange ratio is not subject to market price adjustment.
The acquisition is expected to close in the fourth quarter and to be accounted for as a pooling of interests. Webster expects to recognize a restructuring charge of about $3 million.
The purchase price is about 1.5 times Shelton's book value at March 31. On that date, Shelton had $295 million of assets; it earned $2.3 million in the fiscal year ended June 30, 1994.
Webster Financial is the holding company of First Federal Bank and Bristol Savings Bank.
At March 31, Webster had assets of $2.8 billion and consolidated net income of $4.7 million for the first quarter of 1995. The merger must be approved by Shelton's shareholders and by federal and state bank regulators and is subject to customary closing conditions.
Shelton has granted Webster an option, exercisable under certain conditions, to buy newly issued shares of the company's common stock equal to 19.9% of its outstanding shares. The merger agreement contains mutual provisions for expense reimbursement and a breakup fee under certain circumstances.