People's United Financial, Inc. to Acquire Chittenden Corporation

Transaction Sets the Stage for Building Premier Northeast Banking Franchise

    BRIDGEPORT, Conn., June 27 /PRNewswire-FirstCall/ -- People's United
 Financial, Inc. ( PBCT), the holding company for People's United
 Bank, announced today a definitive agreement to acquire Chittenden
 Corporation ( CHZ) in a stock and cash transaction valued at $1.9
 billion. Consummation of the agreement is subject to the approval of the
 shareholders of Chittenden, as well as various regulatory agencies. The
 acquisition is expected to close in the first quarter of 2008.
     "We are delighted that Chittenden Corporation is joining People's
 United Bank as we combine two high-performing banks with similar balance
 sheets, management styles and cultures to create the premier regional
 banking franchise in New England," said John Klein, chairman, president and
 chief executive officer of People's United Bank. "This transaction delivers
 on key commitments we made to investors in the course of our second-step
 conversion. We promised to make acquisitions in contiguous or
 near-contiguous markets; acquire banks with similar balance sheets and
 operating models to ours; and undertake a transaction that is accretive to
 EPS and has an internal rate of return that exceeds our cost of capital,"
 Klein said. "The combination of these two great banks does all this and
 more."
     "People's United Bank, like Chittenden Corporation, has a deep and
 long- standing commitment to its customers, employees and communities,"
 said Paul Perrault, chairman, president and chief executive officer of
 Chittenden Corporation. "Indeed, our banks share the same philosophy and
 cultures. We both believe that -- to drive shareholder value -- we must
 provide an exceptional customer experience. Our structure of separate local
 community banks in New England is one that is admired by People's United
 and will continue. Chittenden Corporation will be provided with two board
 seats and I will become a member of the executive team helping drive the
 integration of the two institutions. We couldn't have found a better
 partner. This union will allow us to continue providing current and future
 customers with a superior experience and even more convenience across New
 England from their local bank."
     The acquisition partially leverages proceeds from the $3.44 billion
 second-step conversion that People's United Financial completed in April.
 The purchase price is approximately $1.9 billion, of which approximately
 55% is in cash and 45% in People's United Financial stock.
     Under the terms of the definitive agreement, which has been unanimously
 approved by both companies' board of directors, at closing Chittenden
 Corporation shareholders will have the right, subject to proration, to
 elect to receive cash or People's United common stock, in either case
 having a value equal to $20.35 plus the product of .8775 times the average
 closing price of People's United shares for the five day period prior to
 the closing. Based on the average closing price of People's United for the
 three day period ending June 25, 2007, the transaction is valued at $37.00
 per Chittenden Corporation share. The actual per share value on
 consummation of the acquisition will depend on the share price of People's
 United at that time. The total transaction value of approximately $1.9
 billion includes approximately $1 billion in cash. The cash consideration
 will be funded through internal resources. The receipt of People's United
 stock by shareholders of Chittenden will be tax-free.
     People's United expects the transaction to be immediately accretive to
 earnings and to have an IRR of approximately 13%. The transaction is
 expected to close in the first quarter of 2008 and is subject to approvals
 by regulators and Chittenden Corporation's shareholders.
     People's United Bank currently operates 160 branches, 75 of which offer
 seven-day banking in Super Stop & Shop locations across Connecticut.
 Chittenden currently has 133 branches in New England through six bank
 subsidiaries. The combined company will have assets of approximately $22
 billion.
     Morgan Stanley acted as financial advisor to People's United and Cleary
 Gottlieb Steen & Hamilton LLP and Thacher Proffitt & Wood LLP acted as
 legal counsel. Lehman Brothers Inc. and J.P. Morgan Securities Inc. acted
 as financial advisor to Chittenden Corporation and Goodwin Procter LLP
 served as legal counsel.
     About Chittenden Corporation
     Chittenden (chittendencorp.com) is a bank holding company headquartered
 in Burlington, Vermont that was founded in 1904 as Chittenden Trust
 Company. Through its subsidiary banks, Chittenden offers a broad range of
 financial products and services to customers in New England, including
 deposit accounts and services; commercial and consumer loans; insurance;
 and investment and trust services to businesses, individuals, and the
 public sector.
     About People's United Financial, Inc.
     People's United Financial, Inc. is the holding company of People's
 United Bank (peoples.com), one of Connecticut's largest banks. People's
 United Financial has assets of $14 billion, more than 240 ATMs and 160
 branches, 75 of which offer convenient seven-day banking in Super Stop &
 Shop locations across Connecticut. A diversified financial services company
 founded in 1842, People's United Bank provides consumer, commercial,
 insurance, retail investment and wealth management and trust services to
 personal and business banking customers.
     Conference Call
     On June 27, 2007, at 9:30 a.m., Eastern Time, People's United Financial
 will host a conference call to discuss this announcement. The call may be
 heard through www.peoples.com by selecting "Investor Relations" in the
 "About People's United" section on the home page, and then selecting
 "Conference Calls" in the "News and Events" section. Additional materials
 relating to the call may also be accessed at People's United Bank Web site.
     Additional Information About this Transaction In connection with the
 proposed merger, People's United will file with the Securities and Exchange
 Commission (the "SEC") a Registration Statement on Form S-4 that will
 include a proxy statement of Chittenden that also constitutes a prospectus
 of People's United. Chittenden will mail the proxy statement/prospectus to
 its stockholders. Investors and security holders are urged to read the
 proxy statement/prospectus regarding the proposed merger when it becomes
 available because it will contain important information. You may obtain a
 free copy of the proxy statement/prospectus (when available) and other
 related documents filed by People's United and Chittenden with the SEC at
 the SEC's website at www.sec.gov. The proxy statement/prospectus (when it
 is available) and the other documents may also be obtained for free by
 accessing People's United website at www.peoples.com under the tab
 "Investor Relations" and then under the heading "Financial Information" or
 by accessing Chittenden's website at www.chittendencorp.com under the tab
 "Investor Resources -- SEC Filings".
     Participants in this Transaction
     People's United, Chittenden and their respective directors, executive
 officers and certain other members of management and employees may be
 soliciting proxies from Chittenden stockholders in favor of the merger.
 Information regarding the persons who may, under the rules of the SEC, be
 considered participants in the solicitation of the Chittenden stockholders
 in connection with the proposed merger will be set forth in the proxy
 statement/prospectus when it is filed with the SEC. You can find
 information about the executive officers and directors of People's United
 in the final prospectus for its conversion filed with the SEC on March 21,
 2007. You can find information about Chittenden's executive officers and
 directors in its definitive proxy statement filed with the SEC on March 9,
 2007. You can obtain free copies of these documents from People's United or
 Chittenden using the contact information above.
     This communication shall not constitute an offer to sell or the
 solicitation of an offer to sell or the solicitation of an offer to buy any
 securities.
     This press release contains statements that may be considered forward-
 looking statements within the meaning of Section 27A of the Securities Act
 of 1933 and Section 21E of the Securities Exchange Act of 1934. These
 forward- looking statements are intended to be covered by the safe harbor
 provisions for forward-looking statements contained in the Private
 Securities Litigation Reform Act of 1995, and this statement is included
 for purposes of complying with these safe harbor provisions. These
 forward-looking statements are based on current plans and expectations,
 which are subject to a number of risk factors and uncertainties that could
 cause future results to differ materially from historical performance or
 future expectations. These differences may be the result of various
 factors, including, among others: (1) failure of the parties to satisfy the
 closing conditions in the merger agreement in a timely manner or at all;
 (2) failure of the shareholders of Chittenden Corporation to approve the
 merger agreement; (3) failure to obtain governmental approvals of the
 merger, or imposition of adverse regulatory conditions in connection with
 such approvals; (4) disruptions to the parties' businesses as a result of
 the announcement and pendency of the merger; (5) costs or difficulties
 related to the integration of the businesses following the merger; (6)
 changes in general, national or regional economic conditions; (7) the risk
 that the cost savings and any other savings from the transaction may not be
 fully realized or may take longer than expected to realize (8) changes in
 loan default and charge-off rates; (9) reductions in deposit levels
 necessitating increased borrowings to fund loans and investments; (10)
 changes in interest rates; (11) changes in levels of income and expense in
 noninterest income and expense related activities; and (12) competition and
 its effect on pricing, spending, third-party relationships and revenues.
     For additional factors that may affect future results, please see
 People's United's and Chittenden Corporation's filings with the Securities
 and Exchange Commission, including People's United's and Chittenden
 Corporation's Annual Report on Form 10-K for the year ended December 31,
 2006. People's United and Chittenden Corporation undertake no obligation to
 publicly update or revise any forward-looking statement, whether as a
 result of new information, future events or other changes.
 
 

SOURCE People's United Financial, Inc.