Security Pacific to Buy Seattle Bank, Becoming Fifth Biggest : Merger to Create $72-Billion Bank Holding Company
Security Pacific Corp. and Rainier Bancorporation said today that they will merge in a stock swap valued at about $1.15 billion, creating a $72-billion bank holding company in one of the biggest U.S. bank mergers ever.
The announcement came a day after Rainier disclosed that it had received separate merger offers from two undisclosed out-of-state banking companies.
Los Angeles-based Security Pacific, the nation’s sixth-largest bank holding company, had been considered a likely suitor.
A combination of Security Pacific and Rainier would create the nation’s fifth-largest bank holding company.
The merger agreement with Security Pacific has been approved by Rainier’s board of directors, Rainier said in a news release.
Completed in 3rd Quarter
The merger is expected to be completed in the third quarter of 1987, forming a corporation with assets of more than $72 billion.
The agreement provides for the exchange of 1.3 shares of Security Pacific common stock for each of the approximately 20.9 million outstanding shares of Rainier stock, plus those Rainier common shares to be issued in the pending acquisition of United Bank of Tacoma, which is expected to close March 15.
Rainier spokesman David Jepsen said the deal means that Security Pacific is buying Rainier stock at about $52.32 per share, which represents a “significant premium” for Rainier shareholders. Rainier stock was trading at about $47 on Monday and had been in the $30-$40 range recently, Jepsen said.
Rainier will retain its name, management, employees and Seattle headquarters, Jepsen said.
“This merger combines two of the strongest, most profitable, most highly regarded banking organizations on the West Coast,” Richard J. Flamson III, chairman and chief executive officer of Pacific Security, and G. Robert Truex Jr., chairman and chief executive officer of Rainier, said in a joint statement.
Advantages for Both
The advantages of the merger to Security Pacific include an expanded customer base and service delivery system. The advantages to Rainier include a stronger financial base and expanded retail and capital markets.
The value of the deal was based on the closing price of Security Pacific stock Monday.
The merger is subject to the approval of regulators and shareholders of both corporations. Security Pacific’s senior managers will recommend that the corporation’s board of directors approve the merger at its meeting Wednesday, according to a joint news release.
News Monday that Rainier was entertaining two separate merger offers sent the bank holding company’s stock value soaring.
