SVB Financial To Buy Boston Private For $900M; Shares Pop 24%

SVB Financial announced the acquisition of Boston Private Financial Holdings, Inc. in a cash and stock deal worth $900 million. The news pushed shares of Boston Private Financial Holdings (BPFH) up 24.2% in Monday’s extended market trading. Meanwhile, SVB Financial stock declined marginally.

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Per the terms of the deal, SVB Financial (SIVB) will pay $2.10 in cash and 0.0228 of its common stock for each share of Boston Private. The transaction has been approved by both companies’ board of directors and is anticipated to be completed in mid-2021.

According to SVB Financial, the “Combined private bank and wealth management assets under management would be $17.7 billion,” based on Sep. 30, 2020 figures. (See SIVB stock analysis on TipRanks).

SVB Financial CEO Greg Becker said, “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.”

Ahead of this announcement, Wells Fargo analyst Jared Shaw upgraded SVB Financial to Hold from Sell and raised the price target to $325 (16.1% downside potential) from $210. Shaw sees improved profitability prospects for mid-cap banks in 2021 and 2022.

The analyst said that these banks have entered 2021 with improved capital adequacy and underwriting standards. He added that broader industry lending standards have also improved.

Meanwhile, the Street has a cautiously optimistic outlook with an analyst consensus of a Moderate Buy based on 6 Buys and 6 Holds. The average analyst price target of $365.50 implies downside potential of about 5.6% to current levels. Shares have gained 54.7% over the past year.