First Citizens' Acquisition of Silicon Valley Bank's Assets Could Be the Deal of a Lifetime
Investors certainly seem to like First Citizens BancShares' (NASDAQ: FCNCA) acquisition of SVB Financial's (OTC: SIVB.Q) former loans and deposits. Following the deal announcement on early Monday, share prices of First Citizens exploded higher by nearly 54%.
And for good reason. Because First Citizens is purchasing SVB's assets at a $16.5 billion discount, the deal is expected to significantly increase First Citizens' tangible book value (by potentially 50% to 100%), or net worth, which bank stocks trade relative to, as well as First Citizens' earnings power. After all, First Citizens is doubling its assets to $219 billion. It's not every day that a bank can do this practically overnight and at such an attractive price.
Any deal of this magnitude does not come without execution risk, and SVB did just collapse due to mismanagement. But if done properly, First Citizens may have just gotten the deal of a lifetime. Here's why.
Source Fool.com
