Street View: Analysts cheer PacWest's $1.1 bln deal with Banc of California

PacWest Bancorp

26/07/2023 14:45

** PacWest Bancorp's  PACW.O  shares rose 29% in early
trading on Wednesday, boosted by investors cheering Banc of
California's  BANC.N  $1.1 billion deal for the lender that has
been under pressure since the crisis earlier this year
    ** PacWest was among the lenders that were rocked by the
collapse of three mid-sized banks earlier this year
    ** BANC shares also up 2.8% in morning trading
    
    COMPELLING BUT ROCKY ROAD AHEAD
    ** KBW ("Outperform,"; PT: $16 on BANC) says proposed deal
as structured appears very financially compelling, and it's no
surprise to the brokerage that the market has received it
favorably
    ** Wedbush ("Neutral,"; PT: $10 on PACW) says the deal is
fair but not an overwhelmingly compelling offer and questioned
if longer-term PACW shareholders will view this as a strong
enough deal price for shareholder approval
    ** "We ultimately expect the deal to get approved, but we
wouldn't be surprised if there was some dissent among a minority
of shareholders and possibly open the door to the potential
emergence of a rival third-party bid" - brokerage 
    ** Wells Fargo ("Overweight" on BANC) says while the
combination with PACW will take time to play out from an
operational standpoint, it immediately adds value for BANC, as
it triples its size and opens it up to a whole new set of bank
investors
    ** Raymond James ("Market Perform," on BANC) says deal marks
a structural transformation for BANC and accelerates its
evolution, with a much improved profitability profile exiting
2024 
    ** Janney Montgomery Scott ("Buy," on BANC) says partnering
with BANC is more attractive than staying independent for PACW,
and it enables new capital for growth

 (Reporting by Manya Saini in Bengaluru)
 ((Manya.Saini@thomsonreuters.com))