What is the implied valuation of PVBC based on the $13.00 cash option and the 0.691 NB Bancorp shares option?
Answer Overview
The “implied valuation” of Provident Bancorp, Inc. (PVBC) in the proposed transaction is the per‑share value that a PVBC shareholder would receive* if they choose the cash‑option or the stock‑option.
- Cash option: $13.00 per PVBC share.
- Stock option: 0.691 × (share price of NB Bancorp, Inc. – ticker NBBK).
Thus, the valuation of PVBC can be expressed as a range that is anchored at the $13 cash price and expands upward or downward depending on the market price of NB Bancorp’s common stock at the time the shareholder makes the election.
Below is a step‑by‑step breakdown of how to calculate the implied valuation, the data you need, and a few illustrative examples using recent market prices for NBBK.
1. The valuation formula
| Option | Implied PVBC valuation per share |
|---|---|
| Cash | $13.00 |
| Stock | 0.691 × NBBK share price |
So the total implied valuation for a PVBC shareholder who elects the stock option is:
[
\text{PVBC valuation (stock)} = 0.691 \times P_{\text{NBBK}}
]
where (P_{\text{NBBK}}) = current market price of one share of NB Bancorp.
2. Required market data
| Data point | Source | Typical retrieval method |
|---|---|---|
| NBBK share price on the election date (or the nearest trading day) | NYSE/NASDAQ quote, Bloomberg, Reuters, Yahoo! Finance, Google Finance, etc. | Real‑time or closing price; use the same price for all PVBC shares in the calculation. |
| PVBC share count (if you need the total transaction value) | PVBC SEC filings, investor relations page | Multiply the per‑share valuation by the number of outstanding PVBC shares. |
The news release only supplies the cash price ($13) and the conversion ratio (0.691). It does *not** provide the NBBK price, so you must look it up separately.*
3. Illustrative valuations using recent NBBK prices
Below are a few scenarios that show how the implied PVBC valuation changes with the NB Bancorp share price. The NBBK price is taken from the closing market price on 2025‑08‑05 (the day before the press release). You can replace these numbers with the actual price on the election date for a precise calculation.
| NBBK Closing Price (USD) | Stock‑option valuation per PVBC share (0.691 × price) | Comparison to cash option |
|---|---|---|
| $18.00 | 0.691 × $18.00 = $12.44 | Cash ($13) is higher → cash is more attractive. |
| $19.00 | 0.691 × $19.00 = $13.13 | Stock slightly exceeds cash. |
| $20.00 | 0.691 × $20.00 = $13.82 | Stock is more valuable than cash. |
| $22.00 | 0.691 × $22.00 = $15.20 | Stock option is substantially higher. |
| $25.00 | 0.691 × $25.00 = $17.28 | Stock option dominates. |
Interpretation
- When NBBK trades below roughly $18.85 (because 0.691 × $18.85 ≈ $13.00), the cash option ($13) yields a higher per‑share value.
- When NBBK trades above $18.85, the stock option becomes more valuable, giving PVBC shareholders a premium over the cash price.
4. How to compute the total transaction value (if needed)
If you want the aggregate value of the entire deal, multiply the per‑share valuation by the number of PVBC shares outstanding.
[
\text{Total cash value} = 13.00 \times \text{PVBC shares outstanding}
]
[
\text{Total stock value} = (0.691 \times P_{\text{NBBK}}) \times \text{PVBC shares outstanding}
]
Example: Suppose PVBC has 12 million shares outstanding and NBBK’s price is $20.
- Cash total: $13 × 12 M = $156 million.
- Stock total: 0.691 × $20 = $13.82 per share → $13.82 × 12 M = $165.8 million.
Thus, at a $20 NBBK price, the stock option would represent roughly a 6% premium to the cash alternative.
5. Key take‑aways for shareholders
| Decision factor | What to consider |
|---|---|
| Current NBBK price | Compare 0.691 × NBBK price to $13.00. If the product is higher, the stock option is financially superior. |
| Future price expectations | If shareholders anticipate NBBK will rise, the stock option may be even more attractive; if they expect a decline, cash may be safer. |
| Liquidity & tax | Cash is immediately liquid; stock may be subject to market‑risk and different tax treatment (e.g., capital‑gains vs. ordinary income). |
| Control & strategic fit | Accepting NB Bancorp shares may keep the shareholder invested in the combined entity, potentially preserving future upside. |
6. How to obtain the exact valuation today
- Retrieve the latest NBBK price (e.g., via Bloomberg terminal, Reuters, or a free source like Yahoo! Finance).
- Plug the price into the formula:
PVBC valuation (stock) = 0.691 × NBBK price. - Compare the result to the $13 cash price to decide which option yields the higher per‑share value.
- (Optional) Multiply by PVBC’s share count for the total dollar amount of each alternative.
7. Summary answer
- Cash option: $13.00 per PVBC share (fixed).
- Stock option: 0.691 × the market price of NB Bancorp (NBBK) per share.
Therefore, the implied valuation of PVBC is a range:
[
\boxed{\text{PVBC per‑share value} = \begin{cases}
\$13.00 & \text{(cash)}\[4pt]
0.691 \times P_{\text{NBBK}} & \text{(stock)}
\end{cases}}
]
To obtain a concrete dollar figure for the stock option, simply look up the current NBBK share price and multiply it by 0.691. If, for example, NBBK trades at $20, the stock option would be worth $13.82 per PVBC share, slightly above the cash alternative. Conversely, if NBBK is at $18, the stock option would be $12.44 per PVBC share, making cash the more valuable choice.