UPDATE: D.A. Davidson Downgrades Sterling Financial Corporation to Neutral, Raises PT Following Announcement of Acquisition by Umpqua

In a report published Friday, D.A. Davidson analyst Jeff Rulis downgraded the rating on Sterling Financial Corporation STSA from Buy to Neutral, but raised the price target from $30.00 to $30.52. In the report, D.A. Davidson noted, “Sterling shareholders will receive 1.671 shares of Umpqua Holdings Corporation (UMPQ – BUY - $16.44) common stock and $2.18 cash for each share of Sterling common stock. This represents a 15% premium to yesterday's (9/11/2013) closing price and is, in our opinion, a fair value (~1.65x current TBV). The offer is approximately 2.5x Sterling's 2010 recapitalization price and the merger would close the chapter on a successful transition from a struggling bank to one with a good franchise value that has attracted an impressive suitor. Existing shareholders of Umpqua and Sterling are expected to own approximately 51% and 49% of the outstanding shares, respectively.” Sterling Financial Corporation closed on Thursday at $28.40.