PacWest Bancorp (PACW) in Los Angeles is dead serious about expanding its California footprint through acquisitions.
Just days after it swooped in and outbid Umpqua Holdings (UMPQ) for American Perspective Bank in San Luis Obispo, the $5.4 billion-asset PacWest has launched an unsolicited bid to acquire First California Financial Group (FCAL) in Westlake Village.
PacWest announced Tuesday night that on May 3 it sent a confidential letter to First California's board offering the to buy the company for $7.25 per share, or a 32% premium above First California's closing price that day. Based on First California's total shares outstanding listed in its most recent proxy filing, the deal price would be about $212 million.
But the $2 billion-asset First California rejected the offer and now PacWest is appealing to First California's shareholders. The company on Tuesday made the confidential letter public and urged First California's shareholders to pressure the board into accepting its offer.
"We strongly prefer to conduct negotiations privately and have a long history of successful acquisitions completed on this basis," PacWest's chief executive, Matt Wagner, said in a statement accompanying the release of the letter. "We've made this disclosure reluctantly, and only after First California summarily rejected our proposal and ignored our previous efforts to engage with them in discussions. Given the significant premium we have offered, we wanted to make sure all [First California] constituents are aware of this attractive proposal."
A merger would create a $7.5 billion-asset company with nearly 100 branches in Southern California. In its May 3 letter to First California's board, PacWest said that combining the banks "presents a unique opportunity to create a valuable community banking franchise possessing the capital resources, scale, management team and financial strength necessary to thrive in the current competitive environment."
The rejection was somewhat surprising because First California is under considerable pressure from its shareholders to find a buyer and in February hired an unnamed investment bank to help it explore its strategic alternatives.
In a statement Wednesday morning, First California said it rejected the bid because PacWest wanted exclusive negotiating rights and failed to respond to a request for further clarification on the terms of the offer.
"The First California Board did not believe that it was in the best interests of stockholders to grant exclusivity to PacWest in the absence of satisfactory clarification of the terms and value of its proposal and taking into account the other strategic alternatives that First California may pursue, including discussions with third parties," First California said.
PacWest's offer to buy First California was made just four days after it said it would pay $58 million in cash for American Perspective — or $14 million more than Umpqua agreed to pay just a few weeks earlier. American Perspective accepted PacWest's offer and has agreed to pay Umpqua a $1.6 million termination fee.