PacWest Bancorp To Buy Square 1 Financial In $849 Mln All-stock Deal

(RTTNews) - Bank holding company PacWest Bancorp (PACW) agreed Monday to acquire smaller peer Square 1 Financial, Inc. (SQBK) in an all-stock deal valued at about $849 million. The deal will create a $19.8 billion asset commercial bank.

"We are very excited to align ourselves with the Square 1 team. Thanks to the talented professionals and founders that built this successful institution, we are confident this transaction with Square 1 represents an excellent opportunity to grow core deposits, expand our nationwide lending platform, and increase our presence in the dynamic technology and life-sciences markets," PacWest CEO Matt Wagner said in a statement.

The deal will see Square 1 shareholders receiving PacWest common stock based on a fixed exchange ratio of 0.5997, implying a total consideration $27.49 per share, based on the PacWest closing common stock price of $45.83 on Friday.

However, the offer price represents a minuscule discount over Square 1's closing share price of $27.68 on Friday. Square 1 stockholders are not expected to recognize gain or loss to the extent of the stock consideration received.

In connection with the deal, Durham, North Carolina-based Square 1's wholly-owned subsidiary Square 1 Bank will also merge into Los Angeles-based Pacific Western Bank, the wholly-owned subsidiary of PacWest Bancorp.

The combined company will remain headquartered in Los Angeles. Senior executives from each of the organizations will man in key positions in the combined entity, with one former Square 1 director being appointed to the PacWest board upon closer of the deal. The combined entity would be the sixth largest publicly-owned bank headquartered in California.

Meanwhile, the Square 1 lending operations will continue to do business under the name Square 1 as a division of Pacific Western Bank.

The deal, expected to close in the fourth quarter of 2015, is primarily subject to approval of bank regulatory authorities and the Square 1 stockholders. Certain stockholders of Square 1 have agreed to vote in favor of the deal.

"Square 1 offers PacWest a complementary line of business and significant core deposit growth. As part of PacWest, we will maintain our steadfast commitment to the entrepreneurial and venture communities, will be able to offer clients a wider array of products and will be well-positioned to continue to serve them through all stages of their growth," Square 1 CEO Doug Bowers stated.

PACW closed Friday's regular trading session at $45.84, down $1.12 on a volume of 0.53 million shares, and SQBK closed at $27.68, down $0.08 on a volume of 0.19 million shares.