Meridian stock slump kills deal to acquire United Counties.

The languishing price of Meridian Bancorp stock proved fatal to its proposed merger with United Counties Bancorp.

When the companies announced the termination of their proposed $376 million stock swap on Friday, Meridian's share price had been below the $27 walk-away price specified in their letter of intent for seven of the last 12 trading days.

The two companies announced the deal on Aug. 30 when Meridian's stock opened at $33. It closed at $25.75 on Thursday.

Meridian shares rose 6.25 cents to $25.81 on the announcement, while $1.7 billion-asset United Counties' shares plummeted $29 to $100.

Meridian chief financial officer David E. Sparks said the bank was still interested in southern New Jersey, and would look at all possibilities, including Chemical Banking Corp.'s branches, which were recently put up for sale.

Analysts said that the United Counties deal may not be the only pending bank merger to fall through because of plunging bank equity prices.

For example, Shawmut National Corp.'s proposed acquisition of Northeast Federal, announced in June, could be endangered because Shawmut's price -- $17.25 Friday afternoon -- is well below the $21 walk-away price in its agreement.

The failure of the Meridian deal, which would have been for 2.2 times book value, caught few observers by surprise.

An agreement was to be announced last month, but the two banks extended the letter of intent, often a sign of trouble.

Meridian and United Counties said the merger termination was mutual, but analyst Elizabeth Summers of Ryan, Beck & Co. said United Counties probably did not like the final price.

There was no termination fee, Mr. Sparks said. Until sellers' expectations come down, Ms. Summers added, deals may be hard to close.

Meridian's is the second deal to fall through in New Jersey this year. In October, Summit Corp. and Bankers Corp. broke off their

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