Robbins LLP: Acquisition of Square 1 Financial, Inc. (SQBK) by PacWest Bancorp (PACW) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Square 1 Financial, Inc. (NASDAQ: SQBW) by PacWest Bancorp (NASDAQ: PACW). On March 2, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which PacWest will acquire Square 1. Under the terms of the agreement, Square 1 shareholders will receive the equivalent of $27.49 for each share of Square 1 common stock.
Is the Proposed Acquisition Best for Square 1 and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Square 1 is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $27.49 merger consideration represents a premium of -0.7% based on Square 1’s closing price on February 27, 2015. This premium is significantly below the average one-day premium of nearly 10.8% for comparable transactions within the past 5 years. Moreover, Square 1 traded as high as $28.75 as recently as February 26, 2015.
On January 21, 2015, Square 1 reported strong earnings results for its 4th quarter 2014. Consolidated net income available to common shareholders for the fourth quarter of 2014 was $9.5 million, or $0.32 per diluted share, compared to $8.8 million, or $0.29 per diluted share, for the third quarter of 2014. Average on-balance sheet deposits were $2.7 billion, up 6.6% from the third quarter of 2014, and average client investment funds were $1.2 billion, up 29.7% compared to the third quarter of 2014. Average loan balances increased 28.9% to $1.2 billion and period end loans increased 24.4% to $1.3 billion. In commenting on these results, Square 1 Chief Executive Officer Doug Bowers remarked, “We are very pleased with 2014 results. Overall loan and deposit growth were strong in the fourth quarter and the full year. We are pleased with credit quality, and are well positioned to continue our momentum into 2015.”
In light of these facts, Robbins LLP is examining Square 1’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Square 1 shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Square 1 shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.