PacWest Bancorp
stock has had a strange almost round trip following a report—then an announcement—that it would be bought out by
Banc of California.
When all is said and done, its shares are still lower on the deal.
The wild ride started when The Wall Street Journal reported at around 2:30 p.m. Tuesday that PacWest (ticker: PACW) would be taken over by Banc of California (BANC). The market assumed the worst, though it’s unclear what the worst would be, and PacWest stock tumbled 27%, while Banc of California gained 11%:
The news became official after the market close, and now PacWest is making back most of its losses, with the stock up 27%, while Banc of California has gained just 0.1%:
The two-day tally, at least through early trading on Wednesday: Banc of California has gained 11%, while PacWest has dropped 7.3%.
That seems to make sense. PacWest shareholders will get 0.6569 shares of Banc of California for each share they own. Do the math, and that comes out to $9.60, only slightly lower than where PacWest is trading. The deal also includes Warburg Pincus and Centerbridge Partners investing $400 in equity of the combined companies. But it also makes the combined financial organization, under pressure since the blowups of Silicon Valley Bank and other banks earlier this year, stronger than they were separately.
“The merger, which features BANC acquiring PACW, and Banc of California merging into Pacific Western Bank, was a bit unexpected timing-wise, but is financially attractive, and beneficial for shareholders of both institutions,” writes DA Davidson analyst Gary Tenner.”
That still doesn’t explain the big moves in PacWest stock, but that’s a mystery that will have to wait for another day.
Write to Ben Levisohn at [email protected]
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