EBC - Why Cambridge Bancorp Stock Soared 24% This Week
2023-09-22 15:02:09 ET
Shares of Cambridge Bancorp (NASDAQ: CATC) are up 20% this week as of 2:30 p.m. ET Friday, according to data provided by S&P Global Market Intelligence , after the bank agreed to be merge in an all-stock transaction with Eastern Bankshares (NASDAQ: EBC) . Eastern Bank stock has declined around 8.6% this week in response to the news -- a likely consequence of the dilutive all-stock nature of the deal.
In a press release Tuesday, Cambridge announced both companies' boards of directors have unanimously approved a deal to merge with Eastern Bank. Under the terms of the agreement, each share of Cambridge common stock will be exchanged for 4.956 shares of Eastern Bank common stock. Eastern Bank expects to issue roughly 39.4 million shares of common stock in the merger. Based on Eastern Bank's closing price of $13.41 per share the day before, the transaction is valued at roughly $528 million -- about a 24% premium to Cambridge's 30-day volume-weighted average price and 114% of its tangible book value.
The deal still requires the approval of regulators and both Cambridge and Eastern shareholders. But assuming all goes as planned, it should close in the first quarter of 2024 -- after which Cambridge Chairman and CEO Denis Sheahan will become CEO of Eastern and join its board of directors. Sheahan will report directly to current Eastern Bank Chairman and CEO Bob Rivers, who will become the combined companies' executive chair and chairman of the board.
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Why Cambridge Bancorp Stock Soared 24% This Week