First California, Premier Service Change Terms of M&A Deal

First California Financial Group (FCAL) has reduced by 38% the number of shares it would pay to acquire Premier Service Bank in Riverside, Calif.

The $1.9 billion-asset First California in Westlake Village has seen its share price increase roughly 44% since the deal was announced in late February. A hostile offer for First California by PacWest Bancorp (PACW) in May was a major reason for the increase.

The shareholders of Premier would still receive $2 million, or roughly $1.59 per share, in the form of First California stock, but the number of shares exchanging hands would be reduced.

Shareholders of the $139 million-asset Premier will receive 293,626 shares of First California, instead of 477,269 as originally announced; that translates to $6.81 per First California share. The companies also increased the maximum price to $7.83 per share, from $5.03, the companies said Tuesday.

The exchange ratio was reduced from about 0.38 to 0.23 First California shares for each Premier one. The amended agreement also extends the closing date from the end of August to Dec. 31.

The original deal was announced about a month after First California had said it had hired an investment bank to explore its options.

Two separate investment groups have publicly questioned First California's plan to increase shareholder value by cutting costs, hiring experienced lenders and completing inexpensive acquisitions.

First California's shares were trading at $6.78 per share midday Wednesday.