Umpqua Holdings to acquire Sterling Financial in $2-bn deal

Umpqua Holdings CorpUmpqua Holdings Corp, the Oregon, US-based financial holding company of Umpqua Bank, yesterday agreed to buy private-equity backed Sterling Financial Corp in a $2-billion cash-and-stock deal.

Umpqua will pay 1.671 of its shares to Sterling shareholders and $2.18 in cash for each share of Sterling common stock, which is around $30.52 based on Umpqua's closing price of $16.96 on Wednesday.

Thomas H Lee Partners and Warburg Pincus, the two largest shareholders of Washington-based Sterling with approximately 20.8 per cent stake, have agreed to vote in favor of the transaction.

Thomas Lee and Warburg Pincus each have the right to appoint a representative on the board of directors of the combined company following closing.

The merger will create the largest community bank in the West Coast with expanded geographic reach.

The combined company will have approximately $22 billion in assets, $15 billion in loans and $16 billion in deposits, with 5,000 associates and 394 stores across five states – Oregon, Washington, Idaho, California and Nevada.

Umpqua and Sterling have also agreed to establish and fund a $10 million community foundation to serving their communities.

Upon completion of the merger, the company will operate under the Umpqua Bank name and brand. It will continue to deliver to service Umpqua and Sterling customers with an expanded branch and ATM network and a broad range of products in retail, small business, private and corporate banking, asset and wealth management, and securities brokerage.

Umpqua Holdings will continue to be led by Ray Davis as president and CEO, while Sterling president and CEO Greg Seibly will join Umpqua Bank as co-president, with Umpqua Bank co-president Cort O'Haver serving in the same capacity.

''Together, Umpqua and Sterling will create something unique in the financial services industry, an organization that offers the products and expertise of a large bank but delivers them with the personal service and commitment of a community bank,'' said Ray Davis.

"Sterling has emerged from its 2010 recapitalisation a stronger, more profitable bank," said Greg Seibly, president and CEO of Sterling Financial Corp. ''We admire Umpqua's shared commitment to community banking and look forward to working with them to create one of the strongest, most innovative community banks in the country."