Here’s why Boston’s private financial stocks are soaring today


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What happened

The market was slightly higher on Tuesday morning, but shares in the wealth management company Boston Private Financial Holding (NASDAQ: BPFH) were on fire. As of 10:25 a.m. EST, the financial stock was up 31%.

So what

The reason for this move is that Boston Private is the latest mergers and acquisitions (M&A) target in the financial industry. SVB Financial Group (NASDAQ: SIVB), parent company of Silicon Valley Bank, has agreed to acquire Boston Private. SVB pays approximately $ 10.94 per share to the wealth management company under a cash and stock deal. Boston Private shareholders will receive $ 2.10 in cash plus 0.0228 SVB shares for each of their shares upon closing of the transaction, which is expected to take place in mid-2021.

Image source: Getty Images.

Apparently, SVB shareholders have mixed feelings about the deal, as SVB Financial shares are down slightly following the news.

The merger represents an acceleration of SVB Financial’s push into wealth management and private banking, as Boston Private would give SVB approximately $ 17.7 billion in assets under management (including $ 16.3 billion from this OK). It would also give SVB a major presence in Boston, which is fast becoming a major tech hub in the United States.

Now what

It should also be noted that at the time of this writing, Boston Private is trading at $ 10.99 per share, which is slightly Following than what SVB Financial has committed to pay. This implies that investors view the closing of the transaction as a near certainty, and it could also reflect the cash and stock nature of the transaction, as SVB Financial has been performing well in recent years.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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