Shares of PacWest Bancorp rose nearly 38% in premarket trading Wednesday after smaller rival Banc of California agreed to buy the lender in an all-stock deal valued at $1.1 billion.
The acquisition deal will see Banc of California pay 0.6569 of its share for each PacWest share, implying a price of $9.60 per PacWest share based on Banc of California's Tuesday closing price. However, PacWest shares were trading above that at $10.47 on Wednesday.
Analysts said the sale of PacWest made sense for shareholders given the struggles the bank faced following the March banking panic. The deal also has strategic merits for Banc of California, accelerating its evolution with an improved profitability profile.
PacWest's sale of a $3.54 billion loan portfolio in August allayed concerns about its financial health. But analysts said PacWest could not recover quickly enough from the turmoil that hit regional banks earlier this year.
Banc of California will receive $400 million in investment from private equity firms Warburg Pincus and Centerbridge Partners as part of the buyout deal.
