DEFM14A: Eastern Bankshares to Acquire HarborOne Bancorp in $489 Million Cash and Stock Merger, Creating $30.5 Billion Combined Bank

Eastern Bankshares, Inc. will acquire HarborOne Bancorp, Inc. in a cash and stock transaction valued at approximately $489 million, creating a combined entity with $30.5 billion in assets and solidifying Eastern's position as Boston's largest community bank by deposits.

Summary

• Eastern Bankshares, Inc. (Eastern) will acquire HarborOne Bancorp, Inc. (HarborOne) through a merger where HarborOne will merge into Eastern, followed by HarborOne Bank merging into Eastern Bank.
• HarborOne shareholders will receive, at their election, either 0.765 shares of Eastern common stock or $12.00 in cash for each share of HarborOne common stock, subject to allocation procedures ensuring 75% to 85% of total shares receive stock consideration.
• Based on Eastern's closing price of $15.48 on April 23, 2025, the implied value of the stock consideration was $11.87 per HarborOne share; as of June 26, 2025, the implied value was approximately $11.70 per share based on Eastern's $15.23 closing price.
• The combined entity is projected to have approximately $30.5 billion in total assets, solidifying Eastern as the largest Boston-based community bank by deposits.
• HarborOne's board of directors unanimously recommends shareholders vote FOR the merger agreement, the non-binding advisory compensation proposal, and the adjournment proposal.
• HarborOne directors and executive officers, collectively owning approximately 3.9% of outstanding shares, have agreed to vote in favor of the merger proposal.
• The merger is expected to close during the fourth quarter of 2025, subject to shareholder and regulatory approvals.

Sentiment

Score: 7

Explanation: The document outlines a strategic merger with clear benefits for both entities, including expanded market presence and anticipated synergies. While it transparently addresses inherent risks and potential challenges, the overall tone and unanimous board recommendations suggest a positive outlook on the transaction's strategic value and expected outcomes.

Positives

• The merger creates a larger, more competitive banking franchise with approximately $30.5 billion in total assets, enhancing Eastern's market position as the largest Boston-based community bank by deposits.
• The transaction expands Eastern's footprint into Rhode Island and further diversifies its customer base.
• The merger is expected to generate significant revenue and cost synergies, improving financial metrics such as earnings and tangible common equity per share for Eastern.
• HarborOne shareholders electing stock consideration will have the opportunity to participate in the future performance of the combined company and benefit from increased liquidity due to Eastern's more active trading market.
• The merger is intended to qualify as a tax-free reorganization under Section 368(a) of the Code for the stock portion of the consideration.
• The transaction offers value certainty for HarborOne shareholders who elect the cash consideration.
• The merger is expected to provide enhanced products and services, higher lending limits, and greater financial resources for HarborOne's customers.
• HarborOne employees are expected to have prospects for continued employment in a larger organization, with certain benefits and severance policies in place.

Negatives

• The value of the stock consideration will fluctuate based on Eastern's market price, which may be greater or less than the implied value at the time of the proxy statement or election.
• HarborOne shareholders may receive a different form of merger consideration (cash or stock) than they elect due to proration procedures.
• HarborOne shareholders who submit stock certificates for election will be unable to sell those shares until the merger is completed, unless they revoke their election.
• The fairness opinion provided to HarborOne's board does not reflect changes in events or circumstances occurring after the opinion date.
• HarborOne will be subject to business uncertainties and contractual restrictions while the merger is pending, potentially impairing its ability to attract/retain key personnel or pursue new opportunities.
• There is a risk that Eastern may fail to realize all anticipated benefits or that the integration process will be more difficult, time-consuming, or costly than expected, potentially leading to lower revenues or higher costs.
• Certain executive officers and directors of HarborOne have interests in the merger that are different from, or in addition to, those of general shareholders.
• HarborOne will incur significant, non-recurring costs related to negotiating and closing the merger, some of which are payable regardless of completion.
• The merger agreement includes a non-solicitation clause and an $18.9 million termination fee, which could discourage alternative acquisition proposals.
• Voting agreements with HarborOne's directors and executive officers (representing 3.9% of shares) could further discourage third-party bids.
• Regulatory approvals may be delayed, not received, or impose burdensome conditions that could adversely affect the combined company.
• Eastern has the right to defer the completion of the merger until February 20, 2026, if conditions are met after October 31, 2025.
• If the merger is not completed, HarborOne's business and financial results could be negatively impacted, including potential payment of the termination fee and litigation risks.
• HarborOne shareholders will have a reduced ownership and voting interest in the combined entity (approximately 10.6%) and will not have dissenters' rights.
• Eastern may issue additional shares in the future, which could dilute the holdings of existing shareholders.

Risks

• The market price of Eastern common stock will fluctuate, affecting the trading value of the stock consideration received by HarborOne shareholders.
• The market price of Eastern common stock after the merger may be affected by factors different from those currently affecting HarborOne or Eastern independently.
• HarborOne shareholders may receive a form of merger consideration different from what they elect due to proration mechanisms (75%-85% stock consideration).
• HarborOne shareholders who submit stock certificates to make an election will not be able to sell those shares unless they revoke their election prior to the election deadline.
• The fairness opinion rendered to HarborOne's board does not reflect changes in events or circumstances occurring after the opinion date.
• HarborOne will be subject to business uncertainties and contractual restrictions while the merger is pending, which may impair its ability to attract, retain, and motivate key personnel or pursue attractive business opportunities.
• Eastern may fail to realize all anticipated benefits of the merger, particularly if the integration of Eastern's and HarborOne's businesses is more difficult, time-consuming, or costly than expected.
• There is a risk of losing key Eastern and/or HarborOne personnel during the pendency of the merger or after its completion.
• Eastern and HarborOne have incurred and expect to continue to incur significant, non-recurring costs related to the merger and integration.
• The merger agreement limits HarborOne's ability to pursue alternatives to the merger and includes an $18.9 million termination fee, which could discourage potential competing acquirers.
• Voting agreements with HarborOne's directors and executive officers (representing approximately 3.9% of shares) could discourage third parties from pursuing alternative transactions.
• Regulatory approvals may not be received, may take longer than expected, or may impose burdensome conditions.
• Eastern may choose to defer the completion of the merger until February 20, 2026, if it cannot be completed by October 31, 2025.
• Either Eastern or HarborOne may choose not to proceed with the merger if it is not completed by April 24, 2026.
• The shares of Eastern common stock received by HarborOne shareholders will have different rights from HarborOne common stock.
• HarborOne shareholders will have a reduced ownership and voting interest in the combined institution (approximately 10.6%).
• Failure to complete the merger could negatively impact HarborOne's future business and financial results, including potential termination fees and litigation.
• Eastern will be able to issue additional shares of its common stock in the future, which may adversely affect the market price of Eastern common stock and dilute existing shareholders.
• Shareholder litigation could prevent or delay the completion of the merger or otherwise negatively impact the business and operations of Eastern and HarborOne.
• HarborOne shareholders will not have dissenters' rights in the merger under Massachusetts law.

Future Outlook

The merger is expected to create a combined banking franchise with approximately $30.5 billion in total assets, further solidifying Eastern as the largest Boston-based community bank by deposits. Eastern anticipates significant revenue and cost synergies from the integration, aiming to enhance financial metrics like earnings and tangible common equity per share. The transaction is also expected to expand Eastern's geographic footprint into Rhode Island and diversify its customer base. The parties anticipate all regulatory approvals will be received during the fourth quarter of 2025, with the merger closing by October 31, 2025, though Eastern retains the right to defer closing until February 20, 2026, if necessary.

Management Comments

• Joseph F. Casey, President and Chief Executive Officer of HarborOne Bancorp, Inc., stated that the HarborOne board of directors unanimously recommends shareholders vote FOR each of the proposals to be considered at the special meeting.
• Eastern's board of directors considered the strategic rationale for the merger, anticipating it will create a combined banking franchise with approximately $30.5 billion in total assets and further solidify Eastern as the largest Boston-based community bank by deposits.
• Eastern's board also noted the opportunity to further diversify its customer base by expanding its footprint into Rhode Island and the complementary nature of the two companies' products, customers, and markets.

Industry Context

This merger reflects a broader trend of consolidation within the financial services industry, particularly among community banks, driven by the increasing importance of operational scale, financial resources, and the need to capitalize on technological developments to maintain efficiency and competitiveness. The transaction aims to strengthen Eastern's market position in the Greater Boston area and expand into contiguous markets like Rhode Island, aligning with Eastern's stated acquisition philosophy of pursuing opportunities that enhance funding profiles, product capabilities, or geographic density while maintaining an acceptable risk profile.

Comparison to Industry Standards

• The fixed exchange ratio is consistent with market practice for transactions of this type and aligns with the strategic purpose of the transaction.
• The $18.9 million termination fee is consistent with market practice for transactions of this type.
• Eastern's strategic rationale for the merger aligns with its previously disclosed acquisition philosophy of prudently pursuing opportunities to acquire banks in existing and contiguous markets that create attractive financial returns, with a focus on enhancing funding profiles, product capabilities, or geographic density.

Management Changes

Corporate Governance

Legal Proceedings

• Neither HarborOne nor its subsidiaries are a party to any, and there are no pending or threatened, material legal, administrative, arbitral, or governmental/regulatory investigations against them or their current/former directors or executive officers that would materially restrict their businesses, have a Material Adverse Effect, or challenge the validity of the merger.
• There is no injunction, order, judgment, decree, or regulatory restriction imposed upon HarborOne or its assets that would materially restrict its business or have a Material Adverse Effect.

Related Party Transactions

• There are no outstanding amounts payable to or receivable from, or advances by, HarborOne or its subsidiaries to, and neither HarborOne nor its subsidiaries is otherwise a creditor or debtor to, any director, executive officer, five percent or greater shareholder, or other affiliate, other than as part of normal and customary terms of employment/service or ordinary course deposits.
• All agreements between HarborOne and its affiliates comply, to the extent applicable, with Sections 23A and 23B of the Federal Reserve Act and the FRB's Regulation W.

Stakeholder Impact

• Shareholders: HarborOne shareholders will receive a mix of cash and Eastern common stock, leading to a reduced ownership and voting interest (approx. 10.6%) in the combined entity. They will not have dissenters' rights.
• Employees: Continuing HarborOne employees will receive annual base salary/wages at least equal to prior levels and employee benefits no less favorable than similarly situated Eastern employees for one year post-merger (excluding certain types). They will have opportunities to apply for open positions at Eastern and may be eligible for severance benefits under a broad-based policy.
• Customers: Customers of HarborOne Bank are expected to benefit from expanded products and services, higher lending limits, and greater financial resources as part of a larger organization.
• Communities: The combined Eastern Bank Foundation will allocate $20 million for charitable endeavors in HarborOne Bank's primary market area, with recommendations from designated HarborOne directors, ensuring continued community support.

Next Steps

• HarborOne shareholders to vote on the Merger Proposal, Merger-Related Compensation Proposal, and Adjournment Proposal at a special meeting on August 20, 2025.
• Eastern and HarborOne to obtain necessary regulatory approvals from the Federal Reserve Board, FDIC, Massachusetts Commissioner of Banks, Massachusetts Housing Partnership Fund, and Rhode Island Banking Division.
• Completion of the merger is anticipated by October 31, 2025, or potentially deferred to February 20, 2026.
• Following the merger, HarborOne Bank will merge with and into Eastern Bank.
• HarborOne common stock will be delisted from Nasdaq and deregistered under the Exchange Act.
• Eastern will integrate HarborOne's business, including conversion of information systems.

Key Dates

Keywords

Merger, Acquisition, Banking, Financial Services, Eastern Bankshares, HarborOne Bancorp, SEC Filing, Proxy Statement, Corporate Governance, Shareholder Vote, Bank Merger Act, Community Reinvestment Act, Stock Exchange, Nasdaq, Massachusetts, Rhode Island