Sovereign Bancorp agreed Tuesday to buy Peoples Bancorp, Lawrenceville, N.J., for $400 million in a stock deal structured to insulate both parties from the roiling market.

The deal, which is slated to close early in the second quarter, features a provision that would allow $875 million-asset Peoples to kill it if Sovereign stock fell below $11 and traded at a 10% discount to that of comparable institutions.

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