CapitalSource Bank, a wholly-owned subsidiary of CapitalSource, merged with and into PacWest's banking subsidiary, Pacific Western Bank.
The acquisition, which was first announced on July 22, 2013, was concluded following receipt of shareholder approval from both institutions and all required regulatory approvals. As of Dec. 31, 2013, CapitalSource had $8.9 billion in assets and PacWest had $6.5 billion in assets. As of Dec. 31, 2013, on a pro forma combined basis with CapitalSource, PacWest had approximately $15.4 billion in assets.
Upon closing, PacWest created the CapitalSource division of Pacific Western Bank. This division, which will operate under the CapitalSource name, will continue to serve businesses nationwide with a full spectrum of middle-market lending. Pacific Western Bank, through its combined network of 81 branches throughout California, will continue to serve small and medium-sized businesses with financing solutions, cash management and deposit services.
Matt Wagner, CEO of PacWest Bancorp and Pacific Western Bank, stated, "The culmination of this merger is a huge win for stockholders and customers of both institutions. The combined company has a nationwide lending engine with excellent credit quality and an enviable deposit and community banking franchise. Customers of both institutions will benefit from a broader array of lending and deposit services than either institution offered alone."
Jim Pieczynski, former CEO of CapitalSource who joined PacWest as a director and as president of the CapitalSource division of Pacific Western Bank, commented, "Our management teams have blended extremely well and are committed to the success of the combined organization. From deposit gathering among CapitalSource borrowers to broader lending to Pacific Western Bank customers, the integration of the two institutions has gone well."
In the merger with CapitalSource, each share of CapitalSource common stock was converted into the right to receive $2.47 in cash and 0.2837 of a share of PacWest Bancorp common stock. PacWest is issuing an aggregate of approximately 56.7 million shares of PacWest common stock to CapitalSource stockholders. Based on the closing price of PacWest's common stock on April 7, 2014 of $45.83 per share, the aggregate consideration payable to CapitalSource common stockholders and holders of equity awards to acquire CapitalSource common stock is approximately $3.1 billion.
Former holders of CapitalSource common stock and equity awards to acquire CapitalSource common stock as a group received shares of PacWest common stock in the merger constituting approximately 55 percent of the outstanding shares of PacWest common stock immediately after the merger. As a result, holders of PacWest common stock immediately prior to the merger, as a group, own approximately 45 percent of the outstanding shares of the PacWest common stock immediately after the merger.
As previously announced, the integration of CapitalSource Bank's deposit system and the conversion of CapitalSource Bank's branches to Pacific Western Bank's operating platform are scheduled to be completed over the weekend of April 12, 2014. CapitalSource has 21 branches, 12 of which are being closed in the consolidation with Pacific Western Bank at the close of business on April 11. One overlapping Pacific Western branch is being closed at the close of business on April 11 as well. All remaining branches will reopen on Monday, April 14 as Pacific Western Bank branches.