Eastern Bankshares to merge with Cambridge Bancorp in $528M deal

Eastern Bankshares (EBC) announced that its wholly owned subsidiary Eastern Insurance Group entered into a definitive agreement to sell its insurance operations to Arthur J. Gallagher & Co. (AJG) for approximately $510M. Also today, Eastern and Cambridge Bancorp (CATC), the parent company of Cambridge Trust Company, announced they have entered into a definitive merger agreement pursuant to which Cambridge will merge with and into Eastern in an all-stock transaction valued at approximately $528M. Under the terms of the merger agreement, which has been unanimously approved by both boards of directors, each share of Cambridge common stock will be exchanged for 4.956 shares of Eastern common stock. Eastern anticipates issuing approximately 39.4M shares of its common stock in the merger. Based upon Eastern’s $13.41 per share closing price on September 18, 2023, the transaction is valued at approximately $528Mand the aggregate consideration represents 114% of Cambridge’s tangible book value and a 24% premium to Cambridge’s thirty-day volume weighted average price. Upon closing, Denis Sheahan, Chairman, President and CEO of Cambridge, will become the CEO of Eastern and will join Eastern’s Board of Directors. Eastern’s President Quincy Miller will be promoted to Vice Chair, President, and Chief Operating Officer. Both Mr. Sheahan and Mr. Miller will report directly to Bob Rivers, who will serve as Executive Chair and Chair of the Board of Directors. In addition to Mr. Sheahan, three Cambridge directors are expected to be elected to Eastern’s Board of Directors in connection with the closing. Given the distinction of the Cambridge Trust brand in the banks’ shared local markets, the combined wealth management and private banking divisions will operate under the Cambridge Trust brand and leadership. Also today, Eastern announced that Eastern Insurance has entered into a definitive agreement to sell its insurance operations to Arthur J. Gallagher & Co., for approximately $510M in cash consideration. On an after-tax basis, the net gain on sale is expected to be approximately $260M. Eastern anticipates that the insurance transaction, which is subject to standard closing conditions, will close in the fourth quarter of 2023. In connection with the sale, current leadership and employees of Eastern Insurance are expected to join Gallagher.