SVB Financial Group (NASDAQ:SIVB), the parent of Silicon Valley Bank, has announced an agreement to acquire Boston Private Financial Holdings (NASDAQ:BPFH) in a deal that will create immediate scale in the bank's private banking and wealth management business.

The part-stock, part-cash deal is worth an estimated $900 million, valuing Boston Private at $10.94 per share.

That's a roughly 30% premium over Boston Private's closing stock price on Jan. 4 and values the bank at about 120% tangible book value. Based on its closing price of $8.39 on Jan. 4, Boston Private traded for 89% tangible book value before the deal.

Silicon Valley Bank

Image source: Silicon Valley Bank

SVB Financial CEO Greg Becker issued a statement saying, "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." 

Boston Private, with $9.4 billion in assets, focuses on higher net worth clients and operates in a lot of innovation centers across the U.S., which complements Silicon Valley's model of catering to the start-up, venture capital, and private equity communities.

The bank is largely focused on wealth management and will grow Silicon Valley's private-banking assets under management from $1.4 billion to $17.7 billion. It also adds $7.2 billion of loans to the private bank as well.

On a conference call, Becker said the bank was drawn to Boston Private's digital banking and wealth management technology platform, which it otherwise would have had to build on their own.

The deal is immediately accretive to Silicon Valley's tangible book value and earnings per share. Silicon Valley expects to realize cost savings equal to 20% of Boston Private's noninterest expense, and to close the deal sometime in the middle of this year.

 

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