Banc of California in Santa Ana has agreed to buy PacWest Bancorp in Beverly Hills, Calif.
The companies said in a press release that it the deal is expected to close in late 2023 or early next year.
Banc of California said that affiliates of funds managed by Warburg Pincus and certain investment vehicles managed or advised by Centerbridge Partners will pay $400 million for equity securities to be issued in conjunction with the deal’s closing. The investors will own about 19% of Banc of California.
The company will repay about $13 billion of wholesale borrowings, funded by asset sales and excess cash. Banc of California also entered into a $3.5 billion interest rate swap and a contingent forward asset sale agreement to hedge interest rate risk and lock in proceeds.
Banc of California will have $36 billion of assets, $25.3 billion of loans, $30.5 billion of deposits and more than 70 branches in California when the deal closes.
Jared Wolff will remain Banc of California’s president and CEO, while John Eggemeyer, PacWest’s lead director, will become chairman. Todd Schell from Warburg will join the board.
The acquisition “will create a robust, well-capitalized and highly liquid institution poised to deliver exceptional service to even more California businesses and communities,” Wolff said in the release.
“Out of the gate, the combined company will have the strength and market position to support the banking needs of small and medium-size businesses in California and to capitalize on the opportunities created for stronger financial institutions in the wake of the recent banking industry turmoil,” he added.
Banc of California said the deal will be more than 20% accretive to its 2024 earning per share. It should be about 3% accretive to tangible book value.
J.P. Morgan Securities advised Banc of California and acted as sole placement agent, while Skadden, Arps, Slate, Meagher & Flom provided legal counsel. Piper Sandler and Sullivan & Cromwell advised PacWest.
Jefferies and Wachtell, Lipton, Rosen & Katz advised Warburg Pincus, while Simpson Thacher & Bartlett advised Centerbridge.