What happened
The market was modestly higher on Tuesday morning, but shares of wealth management firm Boston Private Financial Holding (BPFH) were on fire. As of 10:25 a.m. EST, the financial stock was up 31%.
So what
The reason for the move is that Boston Private is the latest merger and acquisition (M&A) target in the financial sector. SVB Financial Group (SIVB.Q), parent of Silicon Valley Bank, has agreed to acquire Boston Private. SVB is paying about $10.94 per share for the wealth management firm in a cash-and-stock deal. Boston Private shareholders will receive $2.10 in cash plus 0.0228 shares of SVB for each of their shares upon the deal's closing, which is expected to happen in mid-2021.
Image source: Getty Images.
Apparently, SVB's shareholders have lukewarm feelings about the deal, as SVB Financial's stock is down slightly on the news.
The merger represents an acceleration of SVB Financial's push into wealth management and private banking, as Boston Private would give SVB about $17.7 billion in assets under management ($16.3 billion of which is coming from this deal). It would also give SVB a major presence in Boston, which is rapidly emerging as a major tech hub of the United States.
Now what
It's also worth noting that as of this writing, Boston Private is trading for $10.99 per share, which is slightly more than what SVB Financial has agreed to pay. This implies that investors see the deal's closing as a virtual certainty, and it could also reflect the cash-and-stock nature of the transaction, as SVB Financial has been an excellent performer in recent years.
