Private Equity News & Analysis

Warburg and THL sell stakes in Sterling Financial

Umpqua Holdings will acquire Sterling Financial for $2bn and merge the company into a single entity under the Umpqua Bank name. Warburg and THL will receive a combination of cash and Umpqua shares as a result of the deal.

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Warburg Pincus and Thomas H Lee Partners will each sell their 20.8 percent stakes in Nasdaq-listed US bank Sterling Financial to Umpqua Holdings.

The parent company of Oregon-based Umpqua Bank, Umpqua Holdings will acquire Sterling and merge it into a single entity under the Umpqua Bank name in a transaction valued at $2 billion. At a per-share price of $30.52 for Sterling – made up of $2.18 of cash and 1.671 shares of Umpqua common stock – the transaction represents about a 12.7 percent premium to Wednesday’s opening price.

Following completion of the transaction, which is expected to close during the first half of 2014, Warburg and Thomas H Lee will own shares of Umpqua Bank. The combined bank will have about $22 billion in assets, $15 billion in loans and $16 billion in deposits. 

Thomas H Lee invested a reported $170 million in Sterling in 2010. Warburg invested $171 million in the company the same year.

Kirkland and Ellis advised Warburg Pincus in connection with the deal.Â