Veritex Holdings Loses a Quarter Of Its Market Cap After Merger Announcement

Veritex Holdings Inc. plunged more than 25% Wednesday afternoon after the Texas-based bank announced that it would merge with another bank in the same state, Sovereign Bancshares Inc. Veritex said it would issue more than 5 million shares to Sovereign and pay $58 million in cash to complete the deal. In a separate announcement, the company said it would sell fresh shares on the open market to fund the cash portion of the payment. Veritex, which ended Wednesday's session with a market capitalization of $245.5 million, plunged from $22.84 a share in late trading to $17.01 after a trading halt of about 30 minutes. The deal is expected to close in the second quarter of 2017.