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The Street largely welcomed Pinnacle Financial Partners Inc.'s transformational acquisition of BNC Bancorp but expressed some caution about the potential execution risk arising from the deal.
Late on Jan. 22, Pinnacle unveiled plans to acquire BNC Bancorp for $1.9 billion, or 2.91x tangible book value. While the price tag was considered lofty, Pinnacle expects the deal to be accretive to earnings and tangible book value, inclusive of plans to raise $175 million in Tier 1 capital.
Investors recognized the strategic and financial merits of the deal, sending shares of Pinnacle 1.50% higher to $64.25 on Jan. 23.
But some analysts noted that the considerable size of the transaction brings execution risk, with the target equating to close to 65% of the buyer's assets.
Raymond James analyst Michael Rose said the financial and strategic merits of the transaction make "all the sense in the world" but he is going to take a wait-and-see approach.
"This is one of the best banks in the country. Is this now a bank that is priced for perfection? I think that question has to be asked," Rose said in an interview. "If they...