Shawmut National Corp. on Thursday said it will buy Peoples Bancorp of Worcester, Mass., for about $180 million in stock.

The acquisition will give Shawmut the largest retail market share in Worcester, the second-largest city in New England. Peoples, a thrift holding company with $913 million in assets, operates 23 branches in central Massachusetts.

The planned price represents 1.76 times Peoples' book value.

Analysts described the price as high but justifiable. Because the deal is an in-market acquisition, it should enable Shawmut to realize substantial costs savings, they said.

|A Clean Thrift'

"It's a good in-market acquisition of a clean thrift," said Michael Mayo, an analyst at UBS Securities, who noted that Shawmut has slightly more branches than Peoples in Worcester.

Following the announcement Thursday afternoon, Shawmut's stock fell $1, to $23 per share, while People's soared $9, to $47.50.

Under the agreement, each share of Peoples will be exchanged for shares of Shawmut valued at $52 a piece.

Peoples, which went public in 1986, remained profitable throughout the New England downturn. For the first six months of this year, the thrift company reported net income of $5.65 million, or $1.67 a share.

Second Deal of Year

Shawmut chairman and chief executive Joel B. Alvord said in a press release that the deal, which is expected to close in the first quarter of 1994, should become accretive to earnings per share during the year.

The Peoples acquisition is the second announced by Shawmut, New England's third-largest banking company at $25 billion of assets, this year.

In March, Shawmut agreed to acquire New Dartmouth Bank in New Hampshire for $143 million.

Sources close to the company, which is based in Boston and Hartford, Conn., said it also submitted rejected bids for two Connecticut thrifts this year, New England Savings Bank and Society for Savings. Rhode Island-based Citizens Financial Corp. acquired New England Savings, a failed thrift. Hartford-based Society was purchased by Bank of Boston Corp.

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