California-based PacWest Bancorp has scrapped its agreement to acquire El Dorado Savings Bank for about $466.7m after failing to get approval from the latter’s shareholders.
PacWest Bancorp said that the stock-cum-cash transaction could not get the two-thirds affirmative vote of outstanding shares during a special meeting of El Dorado’s shareholders.
Under the agreement terms, neither companies will be responsible for payments to the other party in the event of the deal termination.
The deal was announced in September 2018 to create a combined company with nearly $26.7bn in assets and 110 branches as of 30 June 2018.
El Dorado chairman Tom Meuser said: “The El Dorado board and I are disappointed that the unexpected recent decline in bank stocks – which significantly reduced the nominal value of the proposed stock and cash transaction – has affected shareholder support at this time.
“El Dorado’s board and management team will work together to map an independent path forward. In the meantime, our customers and employees should expect the same high-quality service and prudent management that have defined El Dorado for the past 60 years.”
As per the terms of the agreement, El Dorado, which is a federally chartered savings bank based in California, was to merge with Pacific Western Bank, PacWest Bancorp’s main operating subsidiary.
At the time of signing the agreement, El Dorado, which was established in 1958, was reported to have about $2.2bn in assets and 35 branches located mainly in eight Northern California counties and two Northern Nevada counties.
PacWest Bancorp, on the other hand, has more than $24bn in assets and through Pacific Western Bank, has 74 branches across California along with one branch in Durham, North Carolina.
PacWest president and CEO Matt Wagner said: “We will continue to execute our business plan and work to produce top-tier operating results, and we intend to continue our M&A strategy, which prioritizes being a financially disciplined acquirer – a strategy we’ve refined through 29 successful acquisitions over the past 18 years.”