A bank that has thrived by financing California startups and venture capital firms is acquiring Boston Private Financial Holdings Inc. for $900 million, in a bid to expand into private banking and wealth management for rich people who run those businesses and others like them.
SVB Financial Group, the parent of Silicon Valley Bank, said Monday it agreed to pay $10.94 a share for Boston Private, a premium of more than 29 percent over the Boston company’s closing stock price on Dec. 31.
SVB’s market value has surged in recent years amid a boom in the tech industry, and it’s using its shares as currency to snap up Boston Private. The California company’s stock is up more than 60 percent over the past three years, while Boston Private’s shares have sagged by 45 percent.
In a conference call with analysts, SVB chief executive Greg Becker said he was attracted by Boston Private’s reputation, technology, and team of executives and wealth managers.
Boston Private chief executive Anthony DeChellis will be cohead of private banking and wealth management with SVB’s Yvette Butler after the deal is completed in mid-2021. Their businesses had a combined $17.7 billion in client assets under management as of Sept. 30, almost all coming from Boston Private, and $11.6 billion in private banking loans, more than half from Boston Private.
SVB said it planned $200 million in charges to cover the costs of integrating the two companies’ technology systems and real estate, and to retain Boston Private employees. While layoffs may occur, SVB said the rationale for the acquisition is growth, not slashing costs, which drives most banking deals. SVB has about 4,300 employees, while Boston Private has 780 at locations in Boston, New York, Florida, Los Angeles, and the San Francisco Bay Area.
SVB executives said they looked hard at Boston Private’s loan portfolio to discern its exposure to COVID-19 related losses. About 18 percent of Boston Private’s $7.2 billion in loans are to the hospitality and retail sectors, both of which have been hammered by the pandemic. SVB said it’s comfortable with the loans.
Under the terms of the deal, Boston Private shareholders will receive 0.0228 shares of SVB common stock and $2.10 of cash for each of their shares, for a split of about 80 percent stock and 20 percent cash.
The deal was announced after the close of regular trading. SVB was down 0.1 percent at $387.34. Boston Private surged to $10.40 in after-hours trading, after closing at $8.39.