Why Sterling Financial Shares Spiked

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sterling Financial (UNKNOWN: STSA.DL  ) , a provider of commercial banking, mortgage lending, and wealth management services, spiked higher by as much as 11% after reports indicated that it may be the subject of a takeover rumor.

So what: According to a report from Bloomberg, Umpqua Holdings (NASDAQ: UMPQ  ) is currently in advanced talks to purchase Sterling Financial for around $1.8 billion based on persons familiar with the matter. A takeover here would come as no surprise to Sterling shareholders as the company has actively been shopping itself around for the past couple of weeks, but it would be a nice boost for Umpqua shareholders who would see the size of their banks' deposits nearly double to more than $20 billion in assets. As the Bloomberg report also states, the deal could fall apart just as easily.

Now what: As usual, I wouldn't advocate taking action in either direction on a stock based on unconfirmed rumors. However, if this buyout proves true, I can't help but feel this is a win-win for both companies. Umpqua is a regional bank that I highlighted exactly eight months ago today for its incredible leadership and steady dividend, and I believe the meld of these two companies would be a perfect fit for Northwest banking consumers. We'll of course have to find out whether or not these rumors prove true, but shareholders of both companies have, at least for now, a reason to smile. 

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Related Tickers

12/31/1969 7:00 PM
STSA.DL $0.00 Down +0.00 +0.00%
Sterling Financial CAPS Rating: No stars
UMPQ $14.85 Down -0.22 -1.46%
Umpqua Holdings CAPS Rating: ****