What happened

Shares of Boston-based Meridian Bancorp (NASDAQ:EBSB) rose by more than 16% as of 10:05 a.m. EDT today, after the company announced yesterday that it will be acquired by competitor Independent Bank Corp. (NASDAQ:INDB).

So what

Independent Bank Corp., the holding company of Rockland Trust, is a $13.8 billion asset bank mostly operating in parts of Massachusetts. Meridian Bancorp, the holding company of East Boston Savings Bank, is a $6.5 billion asset bank largely located in Boston and the surrounding area.

Independent plans to pay $1.15 billion for Meridian, valuing the bank at $21.89 per share, which is a roughly 23% premium over Meridian's closing share price yesterday. The price also values Meridian at 150% of its tangible book value (equity minus intangible assets and goodwill).

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Together, the pro forma institution will have roughly $20 billion in assets and hold the second-largest deposit market share in the Boston metropolitan statistical area and in Massachusetts of any locally headquartered bank.

The deal announcement comes shortly after Independent's main competitor, Eastern Bankshares (NASDAQ:EBC), reported a big acquisition of its own to catapult it to $22 billion in assets.

Now what

The deal looks very financially attractive for Independent. The purchase of Meridian will be immediately accretive to its tangible book value by roughly 8%, meaning it grows the bank's equity right away. Investors typically like to see this.

Independent also expects the deal to grow its earnings from a stand-alone bank by 23% once the transaction is complete in 2022.

Considering the financially attractive metrics of the deal, I would expect shares of Meridian to eventually get to at least the $21.89 the deal values the bank at.

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