This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Umpqua Pays $2B for Sterling Financial

NEW YORK ( The Deal) -- Umpqua Holdings (UMPQ - Get Report) said Thursday, Sept. 12, it would acquire private equity-backed Sterling Financial (STSA) in a $2 billion deal that would create a massive West Coast regional bank.

Terms of the deal call for Portland, Ore.-based Umpqua to pay 1.671 shares and $2.18 in cash for each share of Sterling for total consideration of $30.52 a share, a premium of 26% over Sterling's price on Aug. 30, prior to word of a potential deal going public.

Private-equity firms Thomas H. Lee Partners LP and Warburg Pincus LLC, who each own about 20.8% of Sterling, have agreed to vote their shares in favor of the deal.

The deal would create a banking franchise with $22 billion in assets, $15 billion in loans and $16 billion in deposits and 394 branches spread across Oregon, Washington, Idaho, California and Nevada. It continues the aggressive expansion strategy of the one-time South Umpqua State Bank under the direction of CEO Ray Davis, which has included a number of deals for institutions that were battered by the downturn.

Spokane, Wash.-based Sterling turned to private equity in 2010 to raise capital, raising $442 million from Thomas H. Lee and Warburg Pincus. The bank in the years since has done a series of buys and sales to revamp its branch network, establishing itself as an attractive target in the process.

Josh Bresler, a managing director at THL, called the deal "the logical next step for Sterling," saying the merger "pairs two companies with exceptional management teams and franchises."

Umpqua's Davis, who will remain CEO post-deal, said the merger will create a lender with the scale necessary to compete with banking giants.

"With our size, shared cultures and financial strength, our combined organization will be uniquely positioned to deliver value for our associates, customers, communities and shareholders," Davis said. "We look forward to starting the process of bringing our companies together."

Post-deal Sterling CEO Greg Seibly will join Umpqua as co-president, and Sterling representatives will take four seats on Umpqua's 13 director board.

Umpqua was advised by J.P. Morgan Securities LLC and Wachtell, Lipton, Rosen & Katz, while Sandler O'Neill + Partners LP and Davis Polk & Wardwell LLP advised Sterling. A Weil, Gotshal & Manges LLP team of Michael Aiello and Heath Tarbert advised THL Partners, while Warburg Pincus tapped a Kirkland & Ellis LLP team of Eunu Chun, William Sorabella, Sergio Urias and Christian Nagler.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
STSA $33.10 -1.52%
UMPQ $15.15 0.00%
AAPL $94.19 0.00%
FB $118.06 0.00%
GOOG $695.70 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs