Just weeks after the collapse of talks with a Maine banking company, New Hampshire's NFS Financial Corp. has found another suitor - BayBanks Inc..
The $10.5-billion-asset Boston company said late last month that it will buy NFS for about $86 million in stock and cash.
NFS shareholders will receive $20.15 in cash and 0.2 shares of BayBanks' stock for each of the 2.8 million outstanding shares of NFS, making the deal nondilutive for BayBanks. The price is 1.56 times NFS book value and 12.3 times earnings.
"I think NFS did a great job negotiating the deal for their shareholders," said First Albany Corp. vice president of investments Michael Cerato, noting that cash deals usually involve less money than this deal.
The announcement caught industry analysts off guard because they've seen little merger activity from BayBanks .
The transaction, which is still subject to shareholder and regulatory approval, is expected to close in the third quarter of 1995, BayBanks officials say. NFS will be merged into BayBank.
The apparently successful deal with BayBanks follows a rocky effort by NFS to sell out. The $609-million-asset company was in negotiations several weeks ago with another New England company, identified by sources as Portland, Maine-based Peoples Heritage Financial Group.
But talks collapsed near the end after unexplained leaks alarmed Peoples by causing surges in NFS's stock price, sources said. Talks with BayBanks started immediately afterwards.
NFS officials have declined to comment on the alleged leaks, but president and chief executive James H. Adams noted that there were no similar problems with BayBanks.
The deal is BayBanks' first expansion into New Hampshire and its first unassisted deal in about 20 years.
"The BayBanks name took a lot of people by surprise because they had not ventured out of Massachusetts," Mr. Cerato said. "They've been kind of quiet for a while. But coming into southern New Hampshire makes a lot of sense for their franchise."
But in fact, BayBanks officials have long sought to expand into nearby New Hampshire, which is actually considered part of the greater Boston metropolitan area, said BayBanks chairman and president William M. Crozier Jr. That made the NFS deal an easy decision for the Boston company.
"We've been compiling a playbook on southern New Hampshire for many, many months. Our ears perked up when we heard of the possibility of NFS wanting to talk about doing a deal," Mr. Crozier said. "This has been in our life's plan for some time, so it was pretty easy to pick up the phone and call up and see if we got something to talk about, which it turns out we did."
BayBanks also plans to look at further expansion in New Hampshire, officials have said, but "right at the present time, we're quite satisfied with what we accomplished in 1994," Mr. Crozier said.
