In order to enhance its presence in Southern California, PacWest Bancorp (PACW) announced its entering into a definitive agreement to purchase CapitalSource Inc. (CSE). The deal has been approved by independent directors of both the banks and is expected to be completed in the first quarter of 2014.
The deal has been sealed for approximately $2.29 billion in stock and cash. As per the deal, stockholders of CapitalSource would receive $2.47 in cash and 0.2837 of PacWest’s common shares for each share held. Moreover, on completion of the deal, the total assets of the combined bank would have approximately $15.4 billion along with 96 bank branches in California.
Moreover, the combined bank would have 13 directors, comprising 8 directors from PacWest and 5 from CapitalSource. Further, the combined bank would be headed by Matt Wagner, Chief Executive Officer (CEO) of PacWest and James Pieczynski, CEO of CapitalSource.
It is also anticipated that the deal will add 18% to the earnings per share of the combined entity in 2015.
The lead financial adviser for CapitalSource was JPMorgan Chase & Co. (JPM) and PacWest was advised by Jefferies Group LLC, Goldman Sachs Group Inc. (GS) and Castle Creek Financial LLC. Moreover, the legal counsel for CapitalSource was Wachtell Lipton Rosen & Katz and Sullivan & Cromwell LLP for PacWest.
Earlier in May 2013, PacWest completed the acquisition of First California Financial Group, Inc. for roughly $231.0 million in an all-stock deal.
This is the second largest acquisition of a regional bank after M&T Bank Corporation (MTB) agreed to purchase Hudson City Bancorp, Inc. (HCBK) in Aug 2012. The deal was sealed for $3.7 billion.
This deal is expected to strengthen PacWest’s presence in middle market lending. Moreover, this merger will help boost top-line growth, thus proving accretive to the financials of the company going forward.
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