Prosperity Bancshares (PB) stock plummeted 8.77% during Wednesday's trading session, a sharp decline driven by the company's announcement of a major acquisition alongside its fourth-quarter financial results.

The bank holding company revealed it has agreed to acquire Stellar Bancorp in a cash-and-stock transaction valued at approximately $2 billion. Under the terms, Prosperity will issue 0.3803 of its shares and $11.36 in cash for each Stellar share. The company also disclosed it estimates one-time pre-tax transaction expenses related to the merger of about $100 million, which likely contributed to investor concerns.

The acquisition news coincided with the release of Prosperity's Q4 earnings, which showed adjusted earnings per share of $1.46, slightly beating analyst estimates, while revenue of $317.7 million came in just below expectations. Market reaction appears to reflect apprehension about the significant costs and potential dilution associated with the large-scale merger.