Banc of California to buy troubled PacWest Bancorp, which came close to failing earlier this year
The Banc of California has agreed to buy PacWest Bancorp in an all-stock transaction, bringing an end to months of speculation about whether PacWest could survive on its own after the failures of three other regional banks this spring
NEW YORK — The Banc of California has agreed to buy PacWest Bancorp in an all-stock transaction, bringing an end to months of speculation about whether PacWest could survive on its own after the failures of three other regional banks this spring.
The deal announced Tuesday got help from Warburg Pincus and Centerbridge Partners, two large private equity firms, which are investing $400 million to help shore up and restructure the balance sheet of the combined bank. Centerbridge Partners has a long history as an investor in distressed companies,
The deal is a bit of good news for PacWest, the parent of Pacific Western Bank, and its shareholders. The company's stock has fallen by nearly two-thirds this year on fear that PacWest could be the next bank to fail after the earlier failures of Silicon Valley Bank, First Republic and Signature Bank.
Based on Tuesday's closing prices, PacWest shareholders will receive Banc of California shares valued at $9.60. A year ago the shares traded around $27.
California-based PacWest has a very similar business model to First Republic Bank: serving rich customers and giving clients favorable loans in exchange for those deposits. PacWest also had an investment banking division that served the tech community as well.
To shore up investor confidence and to keep bank regulators from closing it, PacWest has been selling off assets and businesses for last several months. But the stock still fell nearly 30% on Tuesday ahead of speculation that the company would
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