Robbins Arroyo LLP: Acquisition of CU Bancorp (CUNB) by PacWest Bancorp (PACW) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of CU Bancorp (NasdaqCM: CUNB) by PacWest Bancorp (NasdaqGS: PACW). On April 6, 2017, the two companies announced the signing of a definitive merger agreement pursuant to which PacWest will merge with CU Bancorp. Under the terms of the agreement, CU Bancorp shareholders will receive $12.00 in cash and 0.5308 shares of PacWest common stock for each share of CU Bancorp common stock, the value of which is equivalent to $39.45 based on PacWest’s closing price on April 5, 2017.
Is the Proposed Acquisition Best for CU Bancorp and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at CU Bancorp is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $39.45 merger consideration represents a discounted premium of -0.10% based on CU Bancorp’s closing price on April 5, 2017. This premium is significantly below the average one day premium of nearly 18.85% for comparable transactions within the past year. Further, the $39.45 merger consideration is significantly below the target price of $43.00 set by an analyst at Sandler O’Neill & Partners, LP on March 30, 2017, and $42.00 set by analysts at Piper Jaffray and D.A. Davidson & Co. on January 18, 2017, and January 27, 2017, respectively. In the last three years, CU Bancorp traded as high as $40.30 on March 1, 2017, and most recently traded above the merger consideration – at $40.00 – on April 5, 2017.
On January 26, 2017, CU Bancorp reported strong earnings results for its fourth quarter and fiscal year 2016. CU Bancorp reported net income of $7.2 million for the three months ended December 31, 2016, a 30% increase from the same period of the prior year. CU Bancorp also reported net income of $27.5 million for the fiscal year ended December 31, 2016, an increase of 29% over the prior year. Additionally, CU Bancorp has beaten analyst estimates for revenue in three of the past four consecutive quarters, and has beaten analyst estimates for adjusted earnings per share for the past four consecutive quarters. In commenting on these results, CU Bancorp Chief Executive Officer and Chairman of the Board, David Rainer, remarked, “2016 was another year of strong financial performance for the Company… Momentum was maintained throughout the year, with fourth quarter 2016 performance resulting in net income and diluted earnings per share each up 30% over the year-ago quarter. This led to record net income in 2016 of $27.5 million and diluted earnings per share of $1.50, an increase of 29% and 27%, respectively, from 2015.”
In light of these facts, Robbins Arroyo LLP is examining CU Bancorp’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
CU Bancorp shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
CU Bancorp shareholders interested in information about their rights and potential remedies can contact attorney Leonid Kandinov at (800) 350-6003, or you can complete the form below and we will contact you directly.