Sept 26 - Columbia Banking System Inc. (NASDAQ: COLB) and West Coast Bancorp (NASDAQ: WCBO) have agreed to combine their two leading Pacific Northwest community bank franchises in a transaction valued at approximately $506 million. The combined company will have approximately $7.2 billion in assets with more than 150 branches throughout Washington and Oregon and will rank number one in deposit market share among commercial community banks in the combined states of Washington and Oregon.
"We are very pleased that West Coast has agreed to join and grow with Columbia," said Melanie J. Dressel, president and CEO, of Columbia. "We see this as an exciting opportunity for both companies, our shareholders, customers and employees to create the Premier Community Banking Franchise in the Pacific Northwest. On a combined basis, we will have extensive coverage throughout Washington and Oregon, including serving all major MSAs."
Robert D. Sznewajs, president and CEO of West Coast, commented, "This merger is a rare fit of two high quality organizations with similar business models, cultures and values. We think the transaction will provide outstanding benefits to our customers, communities, shareholders, and other constituencies, along with enhancing our proven approach to community banking."
The merger is expected to be immediately accretive to Columbia's earnings per share with an IRR in excess of 15 percent. Anticipated cost savings are expected to be approximately 25 percent of the operating expense base of West Coast, with 50 percent being realized in 2013 and 100 percent being realized thereafter.
The transaction is expected to be completed in the first quarter of 2013, after obtaining the approval of the shareholders of each company and receipt of necessary regulatory approvals. The agreement was unanimously approved by the board of directors of each company. In addition, shareholders of West Coast owning or controlling approximately 22 percent in the aggregate of the currently outstanding shares of West Coast have already agreed to vote in favor of the merger.
Under the terms of the merger agreement West Coast shareholders can elect, subject to allocation procedures, to receive either Columbia common stock, cash, or a combination of both stock and cash for each share of West Coast stock. Aggregate consideration offered in exchange for all of West Coast's capital securities consists of a fixed amount of cash totaling approximately $264.5 million and a fixed amount of Columbia common stock totaling approximately 12.8 million shares. The value received by West Coast shareholders on a per share basis will fluctuate based on Columbia's stock price. Based on Columbia's closing stock price of $18.85 on Sept. 25, West Coast shareholders would have received consideration valued at approximately $23.10 per share. West Coast shareholders will own approximately 24 percent of the common stock of the combined company.
One independent member of West Coast's current board of directors will be invited to join Columbia's board of directors. Sznewajs will assist with the transition process and plans to retire after the integration is successfully underway. Hadley S. Robbins, West Coast's current chief credit officer, will become the group manager for the State of Oregon for Columbia Bank after the close of the transaction, with responsibilities for all commercial and retail banking operations within the State.
Columbia was advised in this transaction by Keefe, Bruyette & Woods Inc., as financial adviser and Graham & Dunn PC, as legal counsel. West Coast was advised by Sandler O'Neill + Partners, L.P., as financial adviser and Wachtell, Lipton, Rosen & Katz, as legal counsel.