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SVB Financial (SIVB) to Buy Boston Private for $900 Million
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In order to further strengthen its private bank and wealth management offerings, SVB Financial Group has inked a deal to acquire Boston Private Financial Holdings, Inc. . The stock-cum-cash transaction, expected to close by mid-2021, is valued at $900 million.
Following this announcement, shares of SVB Financial were down 0.5% in aftermarket trading, while that of Boston Private soared 24.3%.
Transaction Details & Benefits
Per the terms of the deal, shareholders of Boston Private will get 0.0228 shares of SVB Financial and $2.10 of cash for each Boston Private share they own. Following the closure, Boston Private’s shareholders will own approximately 3.5% of SVB Financial.
The deal, already approved by boards of directors of both companies, is still subject to consent of Boston Private’s shareholders and the regulators.
Boston, MA-based Boston Private offers a wide range of wealth, trust and private banking services, which help clients simplify and strengthen their financial positions. So, the deal will significantly improve SVB Financial’s ability to meet all the financial needs of its clients. Further, the adoption of Boston Private’s digital platforms will accelerate SVB Financial’s technology development.
Boston Private will be integrated (which will take around 12-18 months following the closure) with SVB Financial’s SVB Private Bank segment. Based on Sep 30, 2020-data, the combined entity will have private bank and wealth management assets under management worth $17.7 billion.
Notably, Goldman Sachs & Co. LLC, a unit of Goldman Sachs (GS - Free Report) , acted as financial advisor to SVB Financial, while Morgan Stanley & Co. LLC, a division of Morgan Stanley (MS - Free Report) , was the financial advisor to Boston Private
Greg Becker, President and CEO of SVB Financial said “Boston Private's experienced and well-regarded team, robust service offering, and advanced technology platform will significantly bolster our private bank and wealth management capabilities and enhance our ability to offer products and services tailored to the needs of founders, executives and investors.”
Anthony DeChellis, CEO of Boston Private stated “Together, SVB and Boston Private will be well-positioned to grow and scale our business, leveraging SVB's deep client relationships and broad reach across the innovation economy to capture a greater share of the wealth management market.”
SVB Financial expects the deal to be immediately accretive to earnings (excluding restructuring charges) in low single digits and will also help diversify revenues. The company anticipates restructuring costs to be roughly $200 million, including $65 million related to technology systems integration.
Additionally, the transaction will lead to cost savings of 20% of Boston Private’s non-interest expenses in 2020. Of the total cost savings, 25% will be realized this year, 75% in 2022 and 100% thereafter.
Further, following the completion, DeChellis and Yvette Butler (current Head of Private Banking and Wealth Advisory at SVB Financial) will lead the combined private banking and wealth management operation.
Conclusion
SVB Financial continues with its efforts to be one of the foremost providers of financing solutions to innovative companies. Hence, the current deal is likely to further strengthen its position in the innovation economy.
In December 2020, the company acquired the debt investment business of WestRiver Group. With this acquisition, the company’s funds management division, SVB Capital, will be able to establish the SVB Capital Credit Platform. This will enable Silicon Valley Bank's (the banking arm of SVB Financial) clients to access new debt options and also offer “institutional investors additional investment opportunities in the innovation economy.”
Given the strong balance sheet and liquidity position, SVB Financial is expected to continue making efforts to expand, be it through acquisitions and/or expanding operations globally.
In 2020, shares of SVB Financial surged 54.5%, while Boston Private declined 29.7%.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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SVB Financial (SIVB) to Buy Boston Private for $900 Million
In order to further strengthen its private bank and wealth management offerings, SVB Financial Group has inked a deal to acquire Boston Private Financial Holdings, Inc. . The stock-cum-cash transaction, expected to close by mid-2021, is valued at $900 million.
Following this announcement, shares of SVB Financial were down 0.5% in aftermarket trading, while that of Boston Private soared 24.3%.
Transaction Details & Benefits
Per the terms of the deal, shareholders of Boston Private will get 0.0228 shares of SVB Financial and $2.10 of cash for each Boston Private share they own. Following the closure, Boston Private’s shareholders will own approximately 3.5% of SVB Financial.
The deal, already approved by boards of directors of both companies, is still subject to consent of Boston Private’s shareholders and the regulators.
Boston, MA-based Boston Private offers a wide range of wealth, trust and private banking services, which help clients simplify and strengthen their financial positions. So, the deal will significantly improve SVB Financial’s ability to meet all the financial needs of its clients. Further, the adoption of Boston Private’s digital platforms will accelerate SVB Financial’s technology development.
Boston Private will be integrated (which will take around 12-18 months following the closure) with SVB Financial’s SVB Private Bank segment. Based on Sep 30, 2020-data, the combined entity will have private bank and wealth management assets under management worth $17.7 billion.
Notably, Goldman Sachs & Co. LLC, a unit of Goldman Sachs (GS - Free Report) , acted as financial advisor to SVB Financial, while Morgan Stanley & Co. LLC, a division of Morgan Stanley (MS - Free Report) , was the financial advisor to Boston Private
Greg Becker, President and CEO of SVB Financial said “Boston Private's experienced and well-regarded team, robust service offering, and advanced technology platform will significantly bolster our private bank and wealth management capabilities and enhance our ability to offer products and services tailored to the needs of founders, executives and investors.”
Anthony DeChellis, CEO of Boston Private stated “Together, SVB and Boston Private will be well-positioned to grow and scale our business, leveraging SVB's deep client relationships and broad reach across the innovation economy to capture a greater share of the wealth management market.”
SVB Financial expects the deal to be immediately accretive to earnings (excluding restructuring charges) in low single digits and will also help diversify revenues. The company anticipates restructuring costs to be roughly $200 million, including $65 million related to technology systems integration.
Additionally, the transaction will lead to cost savings of 20% of Boston Private’s non-interest expenses in 2020. Of the total cost savings, 25% will be realized this year, 75% in 2022 and 100% thereafter.
Further, following the completion, DeChellis and Yvette Butler (current Head of Private Banking and Wealth Advisory at SVB Financial) will lead the combined private banking and wealth management operation.
Conclusion
SVB Financial continues with its efforts to be one of the foremost providers of financing solutions to innovative companies. Hence, the current deal is likely to further strengthen its position in the innovation economy.
In December 2020, the company acquired the debt investment business of WestRiver Group. With this acquisition, the company’s funds management division, SVB Capital, will be able to establish the SVB Capital Credit Platform. This will enable Silicon Valley Bank's (the banking arm of SVB Financial) clients to access new debt options and also offer “institutional investors additional investment opportunities in the innovation economy.”
Given the strong balance sheet and liquidity position, SVB Financial is expected to continue making efforts to expand, be it through acquisitions and/or expanding operations globally.
In 2020, shares of SVB Financial surged 54.5%, while Boston Private declined 29.7%.
Price Performance in 2020
At present, Boston Private sports a Zacks Rank #1 (Strong Buy) and SVB Financial has a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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