The PacWest Bancorp acquisition of First California Bank will result in the closing of nine overlapping branches, including seven First California branches.
The acquisition, which is valued at $243 million, will result in PacWest becoming the eighth largest California-based publicly-held bank. Prior to the acquisition, First California had $1.9 billion in assets and 15 branches. As a result of the acquisition, PacWest will have more than $7 billion in assets and will serve its customers through a network of 72 branches.
Since the beginning, the acquisition of First California by PacWest has been highly contentious. Initial offers by PacWest were spurned by First California's Board of Directors, and First California solicited offers from rival corporations. At one point, First California's shareholders became involved and strongly advocated for the sale of First California to PacWest. In the end, First California's Board of Directors determined that the acquisition by PacWest was its best option.
Unrelated to the acquisition, First California reached a settlement agreement regarding allegations of unsound banking practices in connection with its offering of prepaid debit card products. First California will pay a civil fine in the amount of $600,000 and will establish a $1.1 million fund to reimburse consumers who used the prepaid debit cards issued by First California. Although PacWest is not a party to the settlement, as the surviving company in the acquisition, PacWest will be responsible for the reimbursement to consumers.
Acquisitions can be an efficient way to fuel a company's growth. As the PacWest transaction illustrates, these acquisitions can be fraught with legal hurdles, including regulatory issues and employment law issues. Retaining qualified corporate counsel at the outset of a transaction may assist in clearing some of these legal hurdles and result in a smoother business transaction. Source: Pacific Coast Business Times, "$243M merger comes with fine, branch closures", Marlize van Romburgh, June 7, 2013
Source: San Fernando Valley Business Journal, "First California Branches to Close Following Completed Acquisition", Mark Madler, June 03, 2013