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 (NASDAQ:STSA), 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.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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