Prosperity Bancshares (PB) experienced a pre-market plunge of 5.31% on Wednesday, following the announcement of its agreement to acquire Stellar Bancorp in a deal valued at approximately $2 billion.
The transaction, structured as a cash-and-stock deal, will see Prosperity issue 0.3803 of its shares and $11.36 in cash for each Stellar share. Investors reacted negatively, likely due to concerns over share dilution and the significant one-time pre-tax transaction expenses estimated at about $100 million related to the merger.
This downward movement occurred alongside the release of the company's fourth-quarter earnings, which reported adjusted earnings per share in line with analyst expectations but a slight revenue miss, potentially compounding investor caution regarding the major acquisition.