BOSTON, AUG. 26 -- Shawmut Corp. and Connecticut-based Hartford National Corp. have agreed to merge in a stock swap that will create a new $25 billion bank holding company, the companies announced today.
The transaction was the latest in a recent series of mergers designed to create "super-regional" bank holding companies with the resources to compete with giant money center banks as interstate banking barriers continue eroding.
The new entity, Shawmut National Corp., will rank as the nation's 21st largest bank holding company.
Hartford National shareholders will receive one Shawmut National share for each of their common shares, and Shawmut shareholders will get 1.8 Shawmut National shares.
The merger is subject to approval by banking regulators and shareholders of the two companies.
Hartford National stock fell $2 to $29.12 1/2 a share and Shawmut rose $3.87 1/2 to $50.12 1/2 in national over-the-counter trading today.
Based on its 40.5 million common shares outstanding, Hartford National had a market value of about $1.18 billion at today's closing price.
Shawmut, with about 16.1 million outstanding common shares, had a market value of about $807 million.
Shawmut, with $10 billion in assets, has 15 commercial banking subsidiaries and 15 additional subsidiary and affiliate companies with offices in 42 cities in the United States, London and Hong Kong.
Hartford National Corp., with $14 billion in assets, is the holding company for Connecticut National Bank, its principal subsidiary, and eight other banks in Connecticut, Massachusetts and Rhode Island. It also has a New England banking franchise of 250 offices.
The new company will maintain co-headquarters in Boston and Hartford.
Under the merger, the chief executive officers of the two companies will retain control of the company, with Shawmut Chief Executive Officer John LaWare serving as chairman and Hartford CEO Joel B. Alvord serving as president and chief executive officer.
"With our increased size, improved service capability and economies resulting from our union, Shawmut National Corp. will be structured and poised to take maximum advantage of banking and nonbanking opportunities as they emerge," LaWare and Alvord said in a joint statement.
Earlier this month, two major super-regionals were created from mergers.
First Fidelity Bancorp. of New Jersey merged with Philadelphia's Fidelcor Inc. in a $1.34 billion stock swap merger considered the biggest ever.
In addition, Pittsburgh-based PNC Financial Corp. announced an agreement to acquire Central Bancorp., of Cincinnati, in an all-stock deal valued at about $719 million.
In March, Fleet Financial Group, of Providence, R.I., and Norstar Bancorp, of Albany, N.Y., agreed to merge in a stock swap valued at about $1.3 billion