The parade of bank deals continues.
Beverly Hills-based PacWest Bancorp and downtown’s CU Bancorp said last week that they intend to combine their operations, with PacWest acquiring CU for $705 million in cash and stock. PacWest, with $21 billion in assets under management, was the fourth-largest bank headquartered in Los Angeles last year.
The CU acquisition adds an additional $4 billion to that number, giving the combined entity a total of $25 billion in assets and 87 bank branches. The transaction has been approved by both companies’ boards and is expected to close in the fourth quarter.
CU’s acquisition price works out to $39.45 a share, a slight discount from the $39.50 it closed at on April 5. The bank’s shares dropped almost 2 percent on April 6 to close at $38.75. PacWest’s stock jumped 2.2 percent that day to close at $52.88 after the merger was announced.
PacWest Chief Executive Matt Wagner said in a statement that his outfit had been eyeing CU – parent of California United Bank – for some time and that the companies are a good strategic match.
“We have long admired the Southern California franchise the CU Bancorp team has built over the years,” Wagner said. “We are confident the partnership announced today will create value for both PacWest and CU Bancorp shareholders.”
The deal includes several provisions should the agreement go south or not close within the next year. One notable stipulation is that CU would have to pay PacWest a kill fee of $26.5 million if it withdraws from the deal under certain circumstances.
Keefe Bruyette & Woods acted as financial adviser to CU with Manatt Phelps & Phillips serving as legal counsel. Sandler O’Neill and Partners was PacWest’s financial adviser on the deal with Sullivan & Cromwell providing legal counsel.
– Henry Meier
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