By Haci Eren Sidar, Leon Gaster, Adalia Melvin, Aviral Jain (University of Nottingham); Kevin Xu, Cooper Thompson (University of Melbourne)
Photo: Vika Chartier (Unsplash)
Overview of the deal
Company 1: Berkshire Hills Bancorp, Inc (NYSE: BHLB)
Company 2: Brookline Bancorp, Inc (NASDAQ: BRKL)
Implied Equity Value: $1.1 billion
Total Transaction Size: $1.1 billion
Closed Date: 4Q25E
Advisors (Berkshire Hills): Raymond James & Associates, Hovde Group, LLC (Financial), Luse Gorman, PC (Legal)
Advisors (Brookline): Hovde Group, LLC (Financial), Goodwin Procter LLP (Legal)
On December 16, 2024, Berkshire Hills Bancorp and Brookline Bancorp announced a definitive agreement to merge in an all-stock transaction valued at $1.1 billion. The merger will create a leading regional banking franchise in the Northeast, with $24 billion in assets and 148 branch offices. It is intended to enhance the entities' competitive positioning by increasing lending capacity, diversifying business operations through complementary geographic footprints across five states with limited overlap, and achieving economies of scale through cost synergies and operational efficiencies.
Under the terms of the agreement, each Brookline share will be exchanged for 0.42 Berkshire shares, giving Berkshire shareholders 51% ownership of the combined entity and Brookline shareholders 45%. This exchange ratio values Brookline shares at $12.68, based on Berkshire's closing price on December 13, 2024. To support the transaction, Berkshire raised $100 million through a common stock issuance at $29.00 per share, with investors in the new shares expected to own approximately 4% of the outstanding shares of the combined company.
The combined company will be headquartered in Boston, Massachusetts, and will operate under a new name with a new ticker symbol to trade on the New York Stock Exchange. Leadership roles will be shared, with Brookline’s Paul Perrault serving as CEO. The merger is expected to close in the second half of 2025, subject to regulatory and shareholder approvals.
"This highly compelling combination is a true merger of equals that will create a preeminent northeast financial institution. Scale and efficiency combined with our shared culture of true community banking is a powerful driver of value for all of our stakeholders." David Brunelle, Berkshire Chairperson
Company Details (Berkshire Hills Bancorp)
Throughout the Northeastern United States, Berkshire Hills Bancorp, a regional bank holding company, offers wealth management, mortgage lending, retail and commercial banking, and financial services. It functions through Berkshire Bank, a subsidiary that is well-established in Connecticut, New York, Massachusetts, and Vermont.
CEO: Nitin J. Mhatre
Number of employees: ~1,300
Market Cap: $1.3bn (as of 01/02/2025)
LTM Revenue: $412m
LTM EBITDA: $130m
Recent Transactions: SI Financial group (2018), Commerce Bank & Trust Company (2017) and Legacy Banks (2011).
Company Details (Brookline Bancorp)
Brookline Bancorp, Inc. is a multi-bank holding company overseeing Brookline Bank, Bank Rhode Island, PCSB Bank, and its subsidiaries. Headquartered in Boston, Massachusetts, the company manages $11.7 billion in assets and operates branches across Massachusetts, Rhode Island, and New York. As a commercially focused financial institution, Brookline Bancorp offers a comprehensive suite of banking services through its banks, including commercial, business, and retail banking solutions. These services encompass cash management products, online banking, consumer and residential loans, and investment services tailored to the needs of small- to mid-sized businesses and retail customers. Additionally, the company provides equipment financing through its Eastern Funding subsidiary.
Founded in 1871, headquartered in Boston, Massachusetts, USA
CEO: Paul A. Perrault
Number of employees: 996
Market Cap: $1.08B (as of 21/02/2025)
LTM Revenue: $355.5M
LTM EBT: $91.7M
LTM P/E: 12.5x
LTM P/BV: 0.82x
Recent Transactions: PCSB Financial Corporation (2022), Bancorp Rhode Island, Inc. (2011)
Projections and Assumptions
Short-Term Consequences
The merger between Berkshire Hills Bancorp Inc. and Brookline Bancorp Inc. will create a leader in the Financial Services industry within the North East market of the United States. This is a major benefit of the merger that management of the new entity is pursuing as the combined $24 billion of assets with a total of 148 branches across the New England and New York region, with Berkshire and Brookline having a complementary portfolio of branches ensuring the new entity has a stronghold of competitive advantage within the area. Brookline’s Chairman and Chief Executive Officer Paul A. Perrault commented on the benefits sought by the complementary geographical footprint, allowing for an improved positioning to satisfy the new entity’s customers and stakeholders.
Additionally, resulting from the merger, the combined entity will record earnings of US$770 million, the combined US$400 million and US$370 million of earnings from Berkshire and Brookline, respectively. Management also expects increased profitability as a result of cost savings, via the elimination of repeated expenses from management salary, and economies of scale, as both companies operate within financial services and the doubling of assets as both companies hold ~12 billion.
The merger results in a 50-50 split of management positions, with half of the roles filled by each company's existing management team. Notably, Paul A. Perrault will serve as the Chief Executive Officer, originally Brookline’s Chief Executive Officer and Chairman; Carl M. Carlson will fill the Chief Financial Officer position, whom is currently the Chief Financial Officer of Brookline; and the Chief Operations Officer position will be filled by Berkshire’s current Chief Operations Officer Sean Gray.
Following the announcement of the merger, Berkshire Hills Bancorp’s share price fell from US$30.20 the previous close to US$29.87 (-1.1% change) with a 4.7% fall in the following days. This is primarily due to the dilution effect of Berkshire’s US$100 million subscription agreement with shares prices at US$29.00 which represents a 4% stake in the new entity formed via the merger whereas Berkshire Hills Bancorp Inc. shareholders have a 51% claim, and Brookline Bancorp Inc. shareholders hold a 45% claim over the merged entity.
Long-Term Upsides
Brookline Bancorp’s $1.1 billion merger with Berkshire Hills Bancorp is set to establish a premier Northeast banking franchise with approximately $24 billion in assets and 148 branches across five states. This increased scale strengthens the bank’s competitive positioning, allowing for greater lending capacity, broader service offerings, and improved market resilience over the long term. The combined entity will be better positioned to serve both retail and commercial clients while capitalizing on regional economic trends.
The merger aims to enhance operational performance and risk management by leveraging the combined management team’s expertise. With a focus on efficiency, the bank expects to improve long-term profitability and balance sheet stability. By also reducing concentration risk and enhancing financial stability, the merger will drive economies of scale, with projected cost savings of $65–$70 million annually through operational synergies.
Beyond financial and operational improvements, the merger also brings long-term benefits for shareholders and the communities the bank serves. Berkshire expects to increase its dividend post-closure to $1.29 per share annually, providing long-term financial benefits to investors. Additionally, the combined entity is expected to maintain strong relationships with small business owners, support local nonprofits and community programs, and offer flexible loan products that national banks often overlook. This focus on community banking ensures that the institution remains engaged with the regions it serves, reinforcing its role as a trusted financial partner while delivering sustainable growth.
Risks and Uncertainties
While the Brookline Bancorp–Berkshire Hills Bancorp merger presents opportunities for growth, market expansion, and operational efficiencies, the transaction also carries significant risks. Successfully navigating regulatory approvals, integration challenges, financial uncertainties, and competitive pressures will be critical for ensuring long-term success. The deal is set to close in the second half of 2025, but delays could arise if regulators impose additional conditions or if shareholders from either company oppose the transaction.
Regulatory bodies will assess whether the merger impacts market competition or consumer interests. The consolidation of multiple bank charters into a single Massachusetts state-chartered institution may raise compliance concerns, potentially leading to extended timelines or modifications to the deal structure. Shareholders may also push back if they are dissatisfied with the valuation or concerned about leadership changes.
Post-merger integration presents further challenges. The combined bank will operate across five states, requiring harmonisation of technology platforms, operational processes, and product offerings. Customer disruptions, inefficiencies, or cultural misalignment could hinder the transition. Workforce redundancies may also create uncertainty among employees, affecting morale and productivity.
Governance dynamics will play a key role in determining the merged entity’s success. The 16-member board, evenly split between Berkshire and Brookline representatives, may struggle to align on strategic priorities, leading to disagreements on major decisions. Additionally, the new regional banking structure will require balancing local autonomy with institutional goals. Managing these complexities effectively will be essential for achieving long-term stability and shareholder value.