PacWest stock soars on $1.1 bln buyout deal with Banc of California (updated)

PacWest Bancorp

26/07/2023 10:41

(Adds analyst comment in paragraphs 6,9 and 10; graphic;
details about the deal in paragraph 2)
    By Niket  Nishant and Manya Saini
       July 26 (Reuters) - PacWest Bancorp's  PACW.O  shares
rose nearly 38% in premarket trading on Wednesday, a day after
smaller rival Banc of California  BANC.N  agreed to buy the
lender for $1.1 billion in an all-stock deal.
    Banc of California's shares jumped nearly 13% after the
lender said it would pay 0.6569 share to PacWest stockholders
for each share they own.
    PacWest stock was trading at $10.47, higher than the offer
price of $9.60 per share, per calculations based on Banc of
California's closing price on Tuesday. 
    "We believe the sale of PacWest makes sense for shareholders
given the numerous struggles the bank has faced since the March
banking panic," Raymond James analyst David Long said.
    The acquisition also has "strategic merits" for Banc of
California, Long added. 
    "The deal marks a structural transformation for BANC and
accelerates its evolution, with a much improved profitability
profile exiting 2024."
    Analysts have said PacWest's decision last month to sell a
$3.54 billion lender finance portfolio to asset manager Ares
Management  ARES.N  would allay all concerns about the health of
its balance sheet.
    PacWest has signed a few asset sale agreements to pacify
jittery investors and reassure depositors, after it came under
pressure following the collapse of three regional lenders
earlier this year that prompted the worst industry turmoil since
the 2008 financial crisis.
    "PacWest just could not recover from its wounds quickly
enough," said Omar Fahmy, analyst at global research firm Third
Bridge.
    "Despite the sale announcement, our experts largely believe
that the 'banking panic' we saw around U.S. regional banks
earlier this year has subsided now we have seen reasonably
positive earnings from PNC and Western Alliance," Fahmy added.  
    On Tuesday, Los Angeles, California-based PacWest reported
its total deposits fell $290.5 million or 1% in the second
quarter.
    Private equity firms Warburg Pincus and Centerbridge
Partners have agreed to invest $400 million in Banc of
California's buyout deal. 
    

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PacWest shares miss out on index rally after March crisis    https://tmsnrt.rs/3rGB6Ml
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 (Reporting by Niket Nishant and Manya Saini in Bengaluru;
Editing by Shinjini Ganguli)
 ((Niket.Nishant@thomsonreuters.com;))