In California, Beverly Hills-based PacWest Bancorp agreed to acquire Los Angeles-based CU Bancorp in a cash-and-stock transaction valued at approximately $705 million.
CU Bancorp shareholders will receive 0.5308 of a share of PacWest common stock and $12.00 in cash for each share of CU Bancorp. The total value of the merger consideration is $39.45 per CU Bancorp share, based on PacWest's April 5 closing price of $51.72.
The merger's terms also include a termination fee of $26.5 million, to be paid by CU Bancorp to PacWest under certain circumstances.
SNL calculates the deal value to be 221.5% of book, 284.3% of tangible book, 26.7x earnings and 22.9x estimated EPS, on a per share basis. The price is also 24.9x last-12-month core earnings, 27.46% of deposits and 23.91% of assets. It has a tangible book premium-to-core deposits ratio of 18.04%. It carries a one-day premium of 0.80%, based on CU Bancorp's April 4 closing price of $39.75, and a one-month premium of 5.17%, based on a closing price of $38.10 on March 6.
For comparison, offers for bank and thrift targets in the West between April 5, 2016, and April 5, 2017, averaged 144.80% of book, 155.17% of tangible book and had a median of 20.57x last-12-month earnings, on an aggregate basis. On a per-share basis, they averaged 147.70% of book, 161.11% of tangible book and had a median of 25.00x last-12-month earnings.
As part of the transaction, California United Bank will merge into Pacific Western Bank. SNL data shows California United had $3.00 billion in assets at the end of 2016; Pacific Western had $21.85 billion.
On a pro forma consolidated basis, using year-end 2016 figures, the resulting entity will have approximately $25.0 billion in assets and 87 branches, prior to branch closures. PacWest will expand in Los Angeles County by five branches, to be ranked No. 12 with a 1.49% share of approximately $381.99 billion in total market deposits. In Orange County, it will expand by two branches, to be ranked ninth with a 2.77% share of approximately $112.37 billion in total market deposits. It will expand in Ventura County by one branch, to be ranked seventh with a 3.68% share of approximately $17.91 billion in total market deposits, and it will expand in San Bernardino County by one branch, to be ranked eighth with a 3.55% share of approximately $20.86 billion in total market deposits.
The transaction is expected to be completed in the fourth quarter, pending regulatory and shareholder approvals.
Keefe Bruyette & Woods acted as financial adviser to CU Bancorp and delivered a fairness opinion to its board, and Manatt Phelps & Philips LLP served as legal counsel. Sandler O'Neill & Partners LP acted as financial adviser to PacWest, with Caspar Bentinck as lead banker. Sullivan & Cromwell LLP served as legal counsel to the buyer.
SNL is an offering of S&P Global Market Intelligence.