Whitney Holding Shares Popped: What You Need to Know
Thu, 23/12/2010 - 11:24 by Matt Koppenheffer
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of New Orleans-based bank Whitney Holding(Nasdaq: WTNY) soared more than 30% in intraday trading today on the news that Hancock Holding (Nasdaq: HBHC) is buying the company for $1.5 billion.
So what: This is an all-stock deal, with Whitney shareholders getting 0.418 shares of Hancock for each Whitney share held. As of this writing -- and following a slide in Hancock's stock this morning -- the deal would value Whitney shares at right around $14.50, slightly above where they're currently trading.
Now what: Whitney shareholders can stick around to try and milk the last bit of gains as the stock creeps toward the acquisition price. However, many will likely want to take their profits and call it a day -- after all, it's a hefty premium and the downside risk from the deal coming apart may outweigh the few percentage points that the stock has left to gain. As for Hancock, the deal looks very "OK" -- Whitney was struggling with some balance sheet issues and the price paid doesn't appear to be a tremendous bargain. Management does seem excited about picking up Whitney's deposit base and brand name, though.
Looking at the bigger picture, the deal market has been heating up for banks lately. Bank of Montreal (NYSE: BMO) snapped up Marshall & Ilsley (NYSE: MI), Berkshire Hills Bancorpjust announced it's grabbing Legacy Bancorp, and there have been rumors flying that PNC Financial (NYSE: PNC) may have its eyes on Regions Financial (NYSE: RF) and BankAtlantic Bancorp (NYSE: BBX). I'm no fan of speculating on acquisitions, but the activity suggests to me that there are definite opportunities in the sector.
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