DeWITT, N.Y. — Community Bank System, Inc. (NYSE: CBU) on Dec. 5 announced it will acquire Northeast Retirement Services, Inc. (NRS) — a privately held, Woburn, Massachusetts–based retirement-plan administrative services firm — for about $140 million in cash and stock. After the deal closes, NRS will become a subsidiary of Benefit Plans Administrative Services, Inc. (BPAS), […]
DeWITT, N.Y. — Community Bank System, Inc. (NYSE: CBU) on Dec. 5 announced it will acquire Northeast Retirement Services, Inc. (NRS) — a privately held, Woburn, Massachusetts–based retirement-plan administrative services firm — for about $140 million in cash and stock.
After the deal closes, NRS will become a subsidiary of Benefit Plans Administrative Services, Inc. (BPAS), a wholly owned subsidiary of Community Bank System.
NRS provides plan accounting, transfer agency, fund administration, trust, and retirement plan services. BPAS is a national provider of employee-benefit related services, including defined contribution, actuarial and pension services, and collective investment fund, and institutional trust services, Community Bank said.
The combination of NRS and BPAS will create an organization with more than $80 million in annual revenue, over $50 billion in trust assets, and 3,800 retirement and other employee-benefit plan administration clients throughout the U.S. and Puerto Rico, according to Community Bank.
The acquisition is expected to close in the first quarter of 2017, subject to certain shareholder and regulatory approvals. The boards of directors of both companies unanimously approved the deal.
“We are very excited to be partnering with NRS, a respected and growing provider of customized institutional trust services,” Mark E. Tryniski, Community Bank System president and CEO, said in a news release. “The transaction will strengthen and complement our existing BPAS businesses, and represents an attractive and balanced utilization of our strong currency and existing surplus capital.”
Tryniski’s mention of “strong currency” is undoubtedly a reference to Community Bank’s stock, which has rocketed up 47 percent year to date through Dec. 7. That makes an acquisition using stock more attractive.
Under the terms of the agreement, Community Bank System will pay NRS shareholders about $70 million worth of its common stock and $70 million in cash.
Community Bank System expects that excluding acquisition-related expenses, the deal will add 4 cents to its GAAP earnings per share in its first full year and add about 5 cents a share in the second year. Community Bank System expects that the transaction will add about 16 cents to its cash earnings per share in the first full year, excluding acquisition-related expenses, and add 17 cents a share in the second year.
Raymond James & Associates — headquartered in St. Petersburg, Florida — acted as exclusive financial advisor (investment bank) to Community Bank System in the acquisition, and New York City–based Cadwalader, Wickersham & Taft LLP was its legal advisor. Loomis & Co., based in Latham (near Albany), acted as exclusive financial advisor to NRS, and Nutter McClennen & Fish LLP, a Boston–based law firm, was its legal advisor.
This acquisition is the second one Community Bank System has announced in the last six weeks. The banking company on Oct. 24 said that it will acquire Merchants Bancshares, Inc. (NASDAQ: MBVT), the largest statewide independent bank in Vermont, in a cash and stock transaction worth about $304 million. That deal will be about 70 percent stock and 30 percent cash, and is expected to close in the second quarter of 2017.
Upon completion of that transaction, Community Bank will cross the $10 billion threshold for total assets, which increases its regulatory requirements and costs as it complies with the Dodd-Frank Act and the federal Consumer Financial Protection Bureau.
Contact Rombel at arombel@cnybj.com