Banknorth Group of Burlington, Vt., announced Friday that it plans to enter New York State by buying Evergreen Bancorp of Glens Falls for $291.2 million in stock.
Evergreen's branch network, stretching from Albany all the way to Canada, runs parallel to Banknorth's in Vermont and Massachusetts.
"It's a mirror image of what we have on this side" of Lake Champlain, said William H. Chadwick, chief executive officer of $3 billion-asset Banknorth.
The deal calls for Banknorth to exchange 0.9 share of its stock for each outstanding share of $1 billion-asset Evergreen. The price represents 3.3 times Evergreen's book value and 22.7 times its 1999 earnings estimates.
Banknorth would issue 7.9 million shares to complete the acquisition, which is expected to close late this year or early in 1999. The deal is expected to add to Banknorth's earnings next year.
James M. Schutz, a bank analyst with ABN Amro Chicago Corp., Chicago, said Banknorth is paying full price for Evergreen, but the geographic match makes the deal attractive.
"Banknorth had been interested in the upper New York market for some time," Mr. Schutz said. "This is going to enhance the overall franchise."
Evergreen had been a rumored takeover candidate for months. In mid- April, the company's stock price peaked amid talk that Evergreen had agreed to be bought out by one of three New York banks. The stock fell a few days later, however, when Evergreen announced it had adopted a shareholder rights plan.
George L. Fredette, Evergreen's chief financial officer, would not say Friday when Evergreen and Banknorth began merger talks. The two companies have a telephone conference call scheduled for today that will reveal some of those details, he said.
Evergreen agreed to be purchased by Banknorth, in part, because Evergreen can keep its name, board of directors, and all branches as a Banknorth subsidiary, Mr. Fredette said.
"It was the best deal for shareholders and employees," he said.