Filed by Banknorth Group, Inc.
(Commission File No. 0-16947)
Pursuant to Rule 425 Under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Ipswich Bancshares, Inc.
(Commission File No. 0-26663)
Date: February 27, 2002
For Immediate Release
For Further Information, Contact:
At Banknorth Group
Brian Arsenault, SVP, Corporate Communications
(207) 761-8517
At Ipswich Bancshares
Frank Kenney, Senior Vice President and Chief Financial Officer
(978) 356-7777
Banknorth Group to Acquire Ipswich Bancshares
Transaction Valued at $41.1 Million
Portland, Maine, February 27, 2002 - Banknorth Group, Inc.
(NASDAQ: BKNG), announced today that it has signed a definitive
agreement to acquire Ipswich Bancshares, Inc. (NASDAQ: IPSW),
parent company of Ipswich Savings Bank with branches in the North
Shore communities of Greater Boston for $41.1 million in cash and
stock.
At December 31, 2001, Ipswich had total assets of $321 million,
deposits of $250 million, loans of $203 million and shareholders'
equity of $15 million. Ipswich operates exclusively in
Massachusetts with banking offices in Ipswich, Beverly, North
Andover, Essex, Reading, Rowley, Marblehead and Salem.
"Ipswich is a natural extension of our current Massachusetts
franchise and adds some great communities to our community
banking network," said William J. Ryan, Banknorth Chairman,
President and Chief Executive Officer. "This market is
essentially `next door' to our presence in the Andover, Topsfield
and Gloucester market areas."
Banknorth Group operates in Massachusetts as Banknorth
Massachusetts.
"Banknorth's commitment to the communities in which it operates
played a large role in our decision to sell," said David L. Grey,
President and Chief Executive Officer. "We believe our customers
will benefit from Banknorth's extensive branch network and wide
array of products and services."
The terms of the agreement call for outstanding shares of Ipswich
common stock, other than treasury shares and dissenters' shares,
to be converted into the right to receive $20.50 per share or a
number of whole shares of Banknorth determined by dividing $20.50
by the average closing prices of the Banknorth common stock over
a specified period, plus cash in lieu of any fractional share
interest.
The terms are subject to election and allocation procedures
which are intended to ensure that 51% of the outstanding Ipswich
common stock will be converted into the right to receive
Banknorth common stock and 49% of the outstanding Ipswich common
stock will be converted into the right to receive cash. The
transaction is intended to qualify as a reorganization for
federal income tax purposes, with the result that shareholders
who exchange their Ipswich stock solely for Banknorth stock will
do so on a tax-free basis.
The transaction is valued at 260% of Ipswich book value per share
at December 31, 2001 and 12.8 times estimated earnings per share
of Ipswich for 2002.
The definitive agreement was approved by the Board of Directors
of Banknorth and the Board of Directors of Ipswich. The
transaction is subject to all required regulatory approvals, the
approval by shareholders of Ipswich and other customary
conditions. The transaction is expected to be completed in the
middle of the year with operational integration to follow soon
after.
In connection with this transaction, Ipswich granted to Banknorth
an option to purchase 19.9 percent of its outstanding common
stock under certain conditions.
"We expect to achieve approximately 25% percent cost savings in
the transaction, principally from consolidating `back office'
functions," said Peter J. Verrill, Banknorth Chief Financial
Officer and Chief Operating Officer. Mr. Verrill noted that
Banknorth expects transaction costs of approximately $4.2 million
in connection with the acquisition, a portion of which will be
charged to earnings as a one-time charge and the balance of which
will increase Banknorth's goodwill.
Mr. Verrill added that the transaction is expected to be
accretive to Banknorth's earnings upon operational integration,
but that because of the small relative size of Ipswich to
Banknorth, 2002 earnings will not be affected. 2003 earnings are
expected to be positively impacted by one cent per diluted share.
Banknorth Group, Inc., headquartered in Portland, Maine is one of
the country's 35 largest commercial banking companies with total
assets of $21.1 billion at December 31, 2001. The Company's
banking subsidiary, Banknorth, NA, operates banking divisions in
Connecticut, Maine, Massachusetts, New Hampshire, New York and
Vermont. Banknorth also operates subsidiaries and divisions in
insurance, investment planning, money management, leasing,
merchant services, mortgage banking, government banking and other
financial services.
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This press release contains forward-looking statements with
respect to the financial condition, results of operations and
business of Banknorth upon consummation of the acquisition of
Ipswich, including statements relating to: (a) the estimated
cost savings and accretion to reported earnings that will be
realized from the acquisition and (b) the merger charges expected
to be incurred in connection with the acquisition. These forward-
looking statements involve certain risks and uncertainties.
Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include,
among others, the following possibilities: (1) estimated cost
savings from the acquisition cannot be fully realized within the
expected time frame; (2) revenues following the acquisition are
lower than expected; (3) competitive pressure among depository
institutions increases significantly; (4) costs or difficulties
related to the integration of the businesses of Banknorth and
Ipswich are greater than expected; (5) changes in the interest
rate environment reduce interest margins; (6) general economic
conditions, either nationally or in the markets in which
Banknorth will be doing business, are less favorable than
expected; or (7) legislation or changes in regulatory
requirements adversely affect the businesses in which Banknorth
would be engaged.
Banknorth and Ipswich will be filing relevant documents
concerning the merger with the Securities and Exchange
Commission, including a registration statement on Form S-4
containing a prospectus/proxy statement. WE URGE INVESTORS TO
READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain these documents free of charge
at the SEC's website, www.sec.gov. In addition, documents filed
with the SEC by Banknorth will be available free of charge from
the Secretary of Banknorth (Carol L. Mitchell, Secretary,
Banknorth Group, Inc., Two Portland Square, P.O. Box 9540,
Portland, Maine 04112-9540, telephone (207) 761-8500), and
documents filed with the SEC by Ipswich will be available free of
charge from the Clerk of Ipswich (Mariell Lyons, Clerk, Ipswich
Bancshares, Inc. 23 Market Street, Ipswich, Massachusetts 01938,
telephone (978) 356-7777). The directors and executive officers
of Ipswich may be deemed to be participants in the solicitation
of proxies to approve the merger. Information about the
directors and executive officers of Ipswich and ownership of
Ipswich common stock is set forth in Ipswich's proxy statement as
filed with the SEC on March 28, 2001. Additional information
about the interests of those participants may be obtained from
reading the definitive prospectus/proxy statement regarding the
proposed acquisition when it becomes available. IPSWICH
INVESTORS SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND OTHER
DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY BEFORE MAKING A
DECISION CONCERNING THE MERGER.
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