In what would be its largest acquisition in more 15 years, UnionBanCal Corp. in San Francisco is buying Pacific Capital Corp. in Santa Barbara, Calif., for about $1.5 billion in cash.
UnionBanCal, the parent of Union Bank of California, has $89.7 billion of assets and more than 400 branches in California, Washington, Oregon, Texas and New York. It is wholly owned by the Bank of Tokyo's Mutsubishi UFJ Financial Group Inc. Pacific Capital is the parent of the $5.9 billion-asset Santa Barbara Bank & Trust.
The deal, announced early Monday, would be the largest for Union Bank of California since the existing bank was created through a merger between Union Bank and Bank of California in 1996.
More notably, it would significantly boost Union Bank's market share along California's central coast, where it currently has minimal presence. Santa Barbara Bank has the No. 1 market share in the Santa Barbara market and has 47 branches throughout the state's central coastal region.
"Santa Barbara and the central coast are very attractive regions for banking and wealth management services, and represent an important geographic expansion for Union Bank," Union Bank President and Chief Executive Officer Masashi Oka said in a news release Monday. "We look forward to working with the employees of Santa Barbara Bank & Trust."
The announcement of the deal comes less than two years after Pacific Capital was recapitalized with a $500 million investment from private-equity investors that was led by Ford Financial Fund LP. A single investment group, SB Acquisition Co. LLC, now owns roughly 75% of Pacific Capital's outstanding stock.
UnionBanCal said it would pay $46 for each outstanding share of Pacific Capital's stock, or about 1.6 times the seller's adjusted tangible book value. The sale is expected to close in the fourth quarter.
Pacific Capital's shares soared Monday on news of the deal. In early trading, the shares were up 57%, to $45.02.