PacWest to buy First California for $231M
Los Angeles-based PacWest Bancorp is buying First California Financial Group for $231 million in an all-stock deal.
At $8 per share, PacWest’s price represents an 18.5 percent premium over First California’s share price at the close on Nov. 6.
The deal also comes after months of tense negotiations between the rival banks. PacWest offered $7.25 per share for First California in an unsolicited buyout made public in May. That offer was rebuffed. First California CEO C.G. Kum said the Los Angeles lender wanted an exclusivity agreement that would have precluded him from talking to other potential buyers.
But after the rejected buyout, First California came under increasing pressure from several large investors who said the bank had not done enough in recent years to increase shareholder value. At least one major investor threatened to oust First California’s board if it did not reconsider the offer.
The two banks said Nov. 6 that the deal is expected to close in the first quarter of 2013. First California Bank would merged into Pacific Western Bank and headquartered out of Los Angeles.
First California is the second-largest bank based in the Tri-Counties, with just under $2 billion in assets as of Sept. 30. It has 15 branches Ventura, San Luis Obispo, Los Angeles, Orange, Riverside, San Bernardino and San Diego counties.
The banks said the directors of both PacWest and of First California have unanimously approved the deal. First California shareholders that own 22 percent of the company’s outstanding shares have also agreed to vote in favor of the deal, the banks said.
Two independent directors from the board of directors of First California will join PacWest’s board of directors after the merger closes.
First California shareholders will receive PacWest common stock in exchange for their shares of common stock in a tax-free deal. First California shareholders are exptected to collectively own about 22 percent of the combined bank.
“We are very pleased to have reached this agreement with First California,” PacWest CEO Matt Wagner said in a Nov. 6 statement. “The merger of these two organizations will create a valuable franchise for the stockholders of both companies, and meaningfully enhance the presence of the combined organization throughout California.”
The banks said the combined institution will be the eighth-largest publicly traded bank based in California and the 12th-largest commercial bank in the state, out of more than 240 lenders.
In a statement, First California CEO and President C. G. Kum said the “combined bank will continue to offer the same dedication and high quality service both institutions are known for, while providing customers with an even greater array of products and higher lending limits. We also believe this transaction provides opportunity for future shareholder value.”
PacWest planted its flag in the Tri-Counties three years ago with the FDIC-assisted purchase of Ventura-based Affinity Bank. In 2010, it bought Solvang-based Los Padres Bank, in another regulator-assisted purchase. And earlier this year, PacWest purchased San Luis Obispo-based American Perspective Bank for $58.1 million.
A senior official at PacWest declined to comment immediately after the deal announcement. First California shares were up more than 4 percent.
The merger rounds out a year of big deals in the region’s banking landscape. The $1.5 billion acquisition of Santa Barbara Bank & Trust parent Pacific Capital Bancorp is expected to close before the end of the year.