PCSB FINANCIAL CORPORATION Item 8.01 Other Events.
As previously disclosed, on
In connection with the proposed merger, Brookline filed with the
Following the mailing of the proxy statement/prospectus to PCSB stockholders, on
PCSB believes that all allegations in the Complaint and Demand Letters are without merit and that the disclosures in the proxy statement/prospectus comply fully with applicable laws. However, solely in order to avoid the expense and distraction of litigation, and without admitting any liability or wrongdoing, PCSB has determined to supplement the proxy statement/prospectus as described in this Current Report on Form 8-K (this "report"). Nothing in this report shall be deemed an admission of the legal necessity or materiality under applicable law of any of the supplemental disclosures set forth herein.
SUPPLEMENTAL INFORMATION TO THE PROXY STATEMENT/PROSPECTUS
The following information supplements the proxy statement/prospectus and should be read in conjunction with the disclosures contained in the proxy statement/prospectus, which should be read in its entirety. To the extent that information set forth herein differs from or
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updates information contained in the proxy statement/prospectus, the information
contained herein supersedes the information contained in the proxy
statement/prospectus. All page references are to pages in the proxy
statement/prospectus dated
Background of the Merger
The disclosure under the heading "Description of the Merger-Background of the Merger " is hereby revised by amending the fourth full paragraph on page 40 of the proxy statement/prospectus to (i) insert the bold and italicized text and (ii) to remove the text which has been struck through:
From mid-February through
The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby revised by amending the last paragraph on page 40 and continuing on page 41 of the proxy statement/prospectus to (i) insert the bold and italicized text and (ii) to remove the text which has been struck through:
PCSB's board of directors met on
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of
The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby revised by amending the first full paragraph on page 41 of the proxy statement/prospectus to insert the bold and italicized text:
On
The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby revised by amending the second full paragraph on page 41 of the proxy statement/prospectus to insert the bold and italicized text:
On
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The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby revised by amending the fourth full paragraph on page 41 of the proxy statement/prospectus to insert the bold and italicized text:
On
The disclosure under the heading "Description of the Merger-Background of the Merger " is hereby revised by amending the eighth full paragraph on page 41 of the proxy statement/prospectus to insert the bold and italicized text:
On
The disclosure under the heading "The Merger Agreement-Conduct of Business Pending the Merger " is hereby revised by amending the second bullet point on page 82 of the proxy statement/prospectus to (i) insert the bold and italicized text and (ii) to remove the text which has been struck through:
• make, declare or pay any dividend or other distribution on its capital stock,
other than dividends from wholly-owned subsidiaries to PCSB or regular quarterly dividends on PCSB common stock consistent with past practice;exceeding, without Brookline's prior written consent, the$0.07 dividend paid by PCSB in the fiscal quarter endingJune 30, 2022 (PCSB declared an increase in its quarterly cash dividend from$0.06 per share to$0.07 per share onApril 27, 2022 ); 4
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Opinion of PCSB's Financial Advisor
The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor- Comparable Company Analyses" is hereby revised by deleting the table under the subheading "PCSB Comparable Company Analysis" on page 49 of the proxy statement/prospectus and replacing the table with the following:
PCSB Comparable Company Analysis
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The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor-Comparable Company Analyses " is hereby revised by deleting the table under the subheading "Brookline Comparable Company Analysis" on page 50 of the proxy statement/prospectus and replacing the table with the following:
Brookline Comparable Company Analysis
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The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor-Comparable Company Analyses " is hereby revised by deleting the first table under the subheading "Analysis of Precedent Transactions" on page 52 of the proxy statement/prospectus and replacing the table with the following:
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The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor-Comparable Company Analyses " is hereby revised by deleting the second table under the subheading "Analysis of Precedent Transactions" on page 52 of the proxy statement/prospectus and replacing the table with the following:
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The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor-Net Present Value Analyses " is hereby revised by amending the last full paragraph on page 52 of the proxy statement/prospectus to (i) insert the bold and italicized text and (ii) to remove the text which has been struck through:
Piper Sandler performed an analysis that estimated the net present value of PCSB
common stock assuming PCSB performed in accordance with certain internal
financial projections for PCSB for the years ending
The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor- Net Present Value Analyses " is hereby revised by amending the last full paragraph on page 53 of the proxy statement/prospectus to (i) insert the bold and italicized text and (ii) to remove the text which has been struck through:
Piper Sandler also performed an analysis that estimated the net present value
per share of Brookline common stock, assuming Brookline performed in accordance
with balance sheet and earnings per share estimates for Brookline for the years
ending
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judgement and informed by Piper Sandler's Comparable Company Analyses. Piper
Sandler selected these price to earnings and tangible book value multiples based
on Piper Sandler's review of, among other matters, the trading multiples of the
The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor- Net Present Value Analyses " is hereby revised by amending the last full paragraph on page 54 of the proxy statement/prospectus to insert the bold and italicized text:
Piper Sandler noted that the net present value analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results thereof are not necessarily indicative of actual values or future results. The following tables describe the inputs and assumptions underlying the discount rates used in the net present value analyses for PCSB common stock and Brookline common stock, respectively, prepared by Piper Sandler. In its normal course of business Piper Sandler employs the Kroll Cost of Capital Navigator and Bloomberg in determining an appropriate discount rate. The discount rate for PCSB common stock equals the risk free rate, plus the equity risk premium, plus the size premium, plus the industry premium. The discount rate for Brookline common stock equals the risk free rate, plus the product of the 2-year beta for Brookline common stock and the equity risk premium, plus the size premium.
Calculation of PCSB Discount Rate Inputs and Assumptions
Risk free rate 3.00%
Equity risk premium 5.50%
Size premium 3.02%
Industry premium (0.16%)
Calculated discount rate 11.36%
Calculation of Brookline Discount Rate Inputs and Assumptions
Risk free rate 3.00%
2 year beta of stock 0.877x
Equity risk premium 5.50%
Size premium 1.22%
Calculated discount rate 9.04%
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The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor- Pro Forma Transaction Analyses " is hereby revised by amending the last paragraph on page 54 and continuing on to page 55 of the proxy statement/prospectus to (i) insert the bold and italicized text and (ii) to remove the text which has been struck through:
Piper Sandler analyzed certain potential pro forma effects of the proposed
merger on Brookline assuming the transaction closes on
2022E 2023E 2024E 2025E
EPS Accretion 1 2.9% 13.1% 12.7% 12.6%
TBV Accretion / (Dilution) 2 (6.9%) (4.5%) (2.3%) (0.4%)
(1) Excluding onetime transaction expenses (2) TBV dilution at Closing of the merger: (7.5%).
The disclosure under the heading "Description of the Merger-Opinion of PCSB's Financial Advisor- Piper Sandler's Compensation and Relationships" is hereby revised by amending the third full paragraph on page 55 of the proxy statement/prospectus and to insert the bold and italicized text:
In the two years preceding the date of Piper Sandler's opinion, Piper Sandler
did not provide any other investment banking services to PCSB. Piper Sandler
did not provide any investment banking services to Brookline in the two years
preceding the date thereof; provided, however, that Piper Sandler acted as an
agent for Brookline's share repurchase program which occurred in 2021, for which
Piper Sandler received approximately
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commissions. In the ordinary course of Piper Sandler's business as a broker-dealer, Piper Sandler may purchase securities from and sell securities to PCSB, Brookline and their respective affiliates. Piper Sandler may also actively trade the equity and debt securities of PCSB, Brookline and their respective affiliates for Piper Sandler's account and for the accounts of Piper Sandler's customers.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Some of the statements contained in this report are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 giving PCSB's or Brookline's expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," "positions," "plan," "projections," "prospects," "forecast," "guidance," "goal," "objective" or "potential," by future conditional verbs such as "assume," "will," "would," "should," "could" or "may," or by variations of such words or by similar expressions. Such forward-looking statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results of Brookline, PCSB or the resulting company following the merger, the resulting company's plans, objectives, expectations and intentions, the expected timing of the completion of the merger, financing plans and the availability of capital, the likelihood of success and impact of litigation and other statements that are not historical facts. These statements are only predictions based on Brookline's and PCSB's current expectations and projections about future events. There are important factors that could cause Brookline's and PCSB's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described in the section entitled "Risk Factors" in the proxy statement/prospectus.
These forward-looking statements are subject to numerous assumptions, risks, and
uncertainties which change over time. In addition to factors previously
disclosed in Brookline's and PCSB's reports filed with the
• the effects of the COVID-19 pandemic on the economy generally and on Brookline
and PCSB in particular;
• the inability to close the merger in a timely manner;
• the failure to complete the merger due to the failure of Brookline shareholders
to approve the Brookline share issuance or of PCSB shareholders to approve the merger agreement and the merger;
• failure to obtain applicable regulatory approvals and meet other closing
conditions to the merger on the expected terms and schedule;
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• the potential impact of the announcement or consummation of the proposed merger
on relationships with third parties, including customers, employees, and competitors;
• business disruption following the merger;
• difficulties and delays in integrating the Brookline and PCSB businesses or
fully realizing cost savings and other benefits;
• each of PCSB's and Brookline's potential exposure to unknown or contingent
liabilities of the other party;
• the challenges of integrating, retaining, and hiring key personnel;
• failure to attract new customers and retain existing customers in the manner
anticipated;
. . .
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