COLUMBIA BANKING SYSTEM, INC. (NASDAQ:COLB) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement |
The Merger Agreement
On January9, 2017, Columbia Banking System, Inc., a Washington
corporation, (Columbia) entered into an Agreement and Plan
of Merger (the Merger Agreement) with Pacific Continental
Corporation, an Oregon corporation (Pacific Continental).
The Merger Agreement provides that, upon the terms and subject to
the conditions set forth therein, an Oregon corporation and a
wholly owned subsidiary of Columbia (Merger Sub), will
merge with and into Pacific Continental (the First
Merger), with Pacific Continental continuing as the surviving
corporation (the Surviving Corporation). Immediately
following the First Merger and as a part of a single integrated
transaction, the Surviving Corporation will merge with and into
Columbia (the Subsequent Merger), with Columbia as the
surviving entity. Immediately following the Subsequent Merger,
Pacific Continental Bank, an Oregon state-chartered bank and
wholly-owned subsidiary of Pacific Continental will merge with
and into Columbia State Bank, a Washington state-chartered bank
and wholly-owned subsidiary of Columbia (Columbia Bank),
with Columbia Bank as the surviving bank (the Bank Merger,
and together with the First Merger and the Subsequent Merger, the
Mergers). The Merger Agreement was adopted by the board of
directors of Columbia (the Columbia Board) and the board
of directors of Pacific Continental (the Pacific Continental
Board).
Subject to the terms and conditions of the Merger Agreement, at
the date and time when the First Merger becomes effective (the
Effective Time), the Pacific Continental shareholders will
have the right to receive, in respect of each share of common
stock of Pacific Continental (Pacific Continental Common
Stock), a number of common shares of Columbia (Columbia
Common Stock) equal to the Exchange Ratio (as defined below),
subject to any adjustments set forth in the Merger Agreement (the
Merger Consideration). Exchange Ratio means the
following: (i)if the average daily closing price of Columbia
Common Stock on Nasdaq (the Columbia Average Closing
Price) for the twenty (20)consecutive trading days prior to
the fifth (5th) business
day immediately prior to the closing date (the Determination
Period) is greater than or equal to $27.76 and less than or
equal to $37.56, then the Exchange Ratio will be 0.6430; (ii)if
the Columbia Average Closing Price for the Determination Period
is greater than $37.56, and the Columbia Average Closing Price
for the Determination Period outperforms the Keefe, Bruyette
Woods Regional Banking Index by greater than fifteen percent
(15%), then the Exchange Ratio will be the quotient, rounded to
the nearest ten-thousandth, obtained by dividing (A)$24.151 by
(B)the Columbia Average Closing Price for the Determination
Period; (iii)if the Columbia Average Closing Price for the
Determination Period is greater than $37.56, and the Columbia
Average Closing Price for the Determination Period does not
outperform the Keefe, Bruyette Woods Regional Banking Index by
greater than fifteen percent (15%), then the Exchange Ratio will
be 0.6430; (iv) if the Columbia Average Closing Price for the
Determination Period is less than $27.76, and the Columbia
Average Closing Price for the Determination Period underperforms
the Keefe, Bruyette Woods Regional Banking Index by greater than
fifteen percent (15%), then the Exchange Ratio will be (A)the
quotient, rounded to the nearest ten-thousandth, obtained by
dividing $17.850 by the Columbia Average Closing Price for the
Determination Period if Columbia does not choose to adjust the
Merger Consideration in accordance with the Merger Agreement, or
(B) 0.6430 if Columbia does choose to adjust the Merger
Consideration as set forth in the Merger Agreement and described
below; and (v)if the Columbia Average Closing Price for the
Determination Period is less than $27.76, and the Columbia
Average Closing Price for the Determination Period does not
underperform the Keefe, Bruyette Woods Regional Banking Index by
greater than fifteen percent (15%), then the Exchange Ratio will
be 0.6430. In connection with clause (iv)above, if Columbia
chooses to adjust the Merger Consideration, which it may do in
its sole discretion, the Merger Consideration will include an
amount in cash equal to (A) $17.850 minus (B) (x) 0.6430
multiplied by (y)the Columbia Average Closing Price for the
Determination Period, and the Exchange Ratio will be
0.6430.
The Merger
Agreement may be terminated in certain circumstances, including:
(i)by mutual written consent of the parties; (ii)by either party
in the event that any required regulatory approval is not
obtained; (iii)by either party in the event that, under certain
circumstances, the First Merger will not have been consummated by
November9, 2017 which may be extended to January9, 2018 in
certain circumstances; (iv)by either party in the event of a
breach by the other party of any covenant or agreement or any
representation or warranty that would result in the failure of
certain conditions to the Merger Agreement; (v)by either party if
the requisite Columbia shareholder approval or Pacific
Continental shareholder approval is not obtained; (vi)by Columbia
in the event Pacific Continental fails to recommend approval of
the Merger Agreement to its shareholders; (vii)by Pacific
Continental, prior to Pacific Continental shareholder approval,
to enter into a superior proposal; and (viii)by either party in
the event the Columbia Average Closing Price for the
Determination Period is less than $26.13; provided, however, if
Columbia exercises its termination right described in clause
(viii), Pacific Continental will have the option of reinstating
the First Merger by adjusting the Exchange Ratio to 0.6430 and
adding to the per share Merger Consideration an amount in cash
equal to $1.048.
The Merger
Agreement provides that at the Effective Time, all outstanding
restricted stock units of Pacific Continental (Pacific
Continental Restricted Stock Units), whether vested or
unvested, will automatically and without any action on the part
of the holders thereof, be cancelled and will only entitle the
holders of such Pacific Continental Restricted Stock Units to
receive (without interest), an amount in cash equal to (i)the
number of shares of Pacific Continental Common Stock subject to
such Pacific Continental Restricted Stock Units immediately prior
to the Effective Time multiplied by (ii)(A) the Exchange Ratio
multiplied by (B)the Columbia Average Closing Price for the
Determination Period (the Equity Award Cashout Price),
less applicable taxes required to be withheld with respect to
such payment. The Merger Agreement provides that at the Effective
Time, any vesting conditions applicable to any Pacific
Continental outstanding restricted stock awards will
automatically and without any action on the part of the holders
thereof, accelerate in full and will be converted into, and
become exchangeable for, the Merger Consideration (less
applicable taxes required to be withheld with respect to such
vesting). The Merger Agreement provides that at the Effective
Time, all outstanding stock options of Pacific Continental
(Pacific Continental Stock Options), whether vested or
unvested, will automatically and without any action on the part
of the holders thereof, be cancelled and will only entitle the
holders of such Pacific Continental Stock Options to receive
(without interest), an amount in cash equal to the product of
(i)the number of shares of Pacific Continental Common Stock
subject to such Pacific Continental Stock Options immediately
prior to the Effective Time, multiplied by (ii)the excess, if any
of (A)the Equity Award Cashout Price over (B)the exercise price
per share of Pacific Continental Common Stock of such Pacific
Continental Stock Options less applicable taxes required to be
withheld with respect to such payment. The Merger Agreement
provides that at the Effective Time, all stock appreciation
rights of Pacific Continental (Pacific Continental Stock
Appreciation Rights), whether cash-settled or stock-settled,
vested or unvested, will automatically and without any action on
the part of the holders thereof, be cancelled and will only
entitle the holders of such Pacific Continental Stock
Appreciation Rights to receive (without interest) an amount in
cash equal to the product of (i)the number of shares of Pacific
Continental Common Stock subject to such Pacific Continental
Stock Appreciation Rights immediately prior to the Effective
Time, multiplied by (ii)the excess, if any, of (A)the Equity
Award Cashout Price over (B)the reference price per share of
Pacific Continental Common Stock of such Pacific Continental
Stock Appreciation Right less applicable taxes required to be
withheld with respect to such payment.
Consummation of
the First Merger is subject to customary conditions, including,
among others, approval by the Pacific Continental shareholders
and the Columbia shareholders and receipt of required regulatory
approvals.
Upon consummation
of the First Merger, the Columbia Board will consist of the
directors serving on the Columbia Board prior to the Effective
Time plus one community-based independent director from the
Pacific Continental Board recommended by Columbias Nominating and
Corporate Governance Committee.
The foregoing
description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the
full text of the Merger Agreement, which is attached hereto as
Exhibit 2.1 and is incorporated herein by reference. The Merger
Agreement should not be read alone, but should instead be read in
conjunction with the other information regarding Columbia,
Pacific Continental, their respective affiliates or their
respective businesses, the Merger Agreement and the Mergers that
will be contained in, or incorporated by reference into, the
Registration Statement on Form S-4 that will include a Joint
Proxy Statement of Pacific Continental and Columbia and a
Prospectus of Columbia, as well as in the Forms 10-K, Forms
10-Q and other
filings that each of Columbia and Pacific Continental make with
the Securities and Exchange Commission (the
SEC).
The Merger Agreement has been
included to provide investors with information regarding its
terms. It is not intended to provide any other factual
information about Pacific Continental, Columbia or their
respective subsidiaries or affiliates. The representations,
warranties and covenants contained in the Merger Agreement were
made only for purposes of the Merger Agreement and as of specific
dates, were solely for the benefit of the parties to the Merger
Agreement, may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of
establishing these matters as facts, and may be subject to
standards of materiality applicable to the contracting parties
that differ from those applicable to investors. Investors are not
third-party beneficiaries under the Merger Agreement and should
not rely on the representations, warranties and covenants or any
descriptions thereof as characterizations of the actual state of
facts or condition of the parties thereto or any of their
respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of representations and warranties
may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in
Pacific Continentals and Columbias public
disclosures.
Additional
Agreements
Concurrently with the
execution of the Merger Agreement, the directors of Pacific
Continental have entered into a Voting and Non-Competition
Agreement with Columbia to which such directors have agreed,
among other things, to vote their shares of Pacific Continental
Common Stock in favor of the Merger Agreement and the
transactions contemplated thereby, and to become subject to
certain transfer, non-competition and non-solicitation
restrictions. In addition, concurrently with
the
execution of the Merger
Agreement, the directors of Columbia have entered into a Voting
Agreement with Pacific Continental, to which such directors have
agreed, among other things, to vote their shares of Columbia
Common Stock in favor of approval of the issuance of Columbia
Common Stock to the Merger Agreement and to become subject to
certain transfer restrictions. The foregoing summary of the
agreements described above does not purport to be complete and is
qualified in its entirety by the text of such agreements, which
are attached as Exhibit 99.1 (Form of Voting and Non-Competition
Agreement by and among Columbia and the members of the Pacific
Continental Board dated January9, 2017) and Exhibit 99.2 (Form of
Voting Agreement by and among Pacific Continental, and the
members of the Columbia Board, dated January9, 2017) hereto and
are incorporated herein by reference.
Item7.01. |
Regulation FD Disclosure |
On January9, 2017, Columbia
and Pacific Continental issued a joint press release announcing
the entry into the Merger Agreement. A copy of the press release
is attached hereto as Exhibit 99.3 and is incorporated herein by
reference.
On January10, 2017, Columbia
intends to hold a joint investor conference call with Pacific
Continental regarding the Mergers. On the call, Columbia, along
with Pacific Continental, intends to discuss certain financial
and other information relating to the Mergers and the Merger
Agreement. Slides that will be made available in connection with
the conference call are attached hereto as Exhibit99.4 and are
incorporated into this Item 7.01 by
reference.
The information in this Item
7.01 and Exhibits 99.3 and 99.4 is furnished and will not be
deemed filed for purposes of Section18 of the U.S. Securities
Exchange Act of 1934, as amended, nor will it be deemed
incorporated by reference in any filing under the U.S. Securities
Act of 1933, as amended, except as will be expressly set forth by
specific reference in such document or
filing.
Forward-Looking
Statements
This Current Report on Form
8-K may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All
statements other than statements of historical fact are
forward-looking statements. These forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause Columbias or Pacific Continentals performance or
achievements to be materially different from any expected future
results, performance, or achievements. Forward-looking statements
speak only as of the date they are made and neither Columbia nor
Pacific Continental assumes any duty to update forward looking
statements. We caution readers that a number of important factors
could cause actual results to differ materially from those
expressed in, or implied or projected by, such forward-looking
statements. Such forward-looking statements include, but are not
limited to, statements about the benefits of the business
combination transaction involving Columbia and Pacific
Continental, including future financial and operating results,
the combined companys plans, objectives, expectations and
intentions and other statements that are not historical facts.
The following factors, among others, could cause actual results
to differ from those set forth in the forward-looking statements:
(i)the possibility that the Mergers do not close when expected or
at all because required regulatory, shareholder or other
approvals and other conditions to closing are not received or
satisfied on a timely basis or at all; (ii)changes in Columbias
share price before closing, including as a result of the
financial performance of Pacific Continental prior to closing, or
more generally due to broader stock market movements, and the
performance of financial companies and peer group companies;
(iii)the risk that the benefits from the transaction may not be
fully realized or may take longer to realize than expected,
including as a result of changes in general economic and market
conditions, interest and exchange rates, monetary policy, laws
and regulations and their enforcement, and the degree of
competition in the geographic and business areas in which
Columbia and Pacific Continental operate; (iv)the ability to
promptly and effectively integrate the businesses of Columbia and
Pacific Continental; (v)the reaction to the transaction of the
companies customers, employees and counterparties; (vi)diversion
of management time on merger-related issues; (vii)lower than
expected revenues, credit quality deterioration or a reduction in
real estate values or a reduction in net earnings; and
(viii)other risks that are described in Columbias and Pacific
Continentals public filings with the SEC. For more information,
see the risk factors described in each of Columbias and Pacific
Continentals Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and
other filings with the SEC.
Additional Information
about the Mergers and Where to Find
It
Shareholders are urged to
carefully review and consider each of Columbias and Pacific
Continentals public filings with the SEC, including but not
limited to their Annual Reports on Form 10-K, their proxy
statements, their Current Reports on Form 8-K and their Quarterly
Reports on Form 10-Q. In connection with the
proposed transaction, Columbia will file with the SEC a
Registration Statement on Form S-4 that will include a Joint
Proxy Statement of Columbia and Pacific Continental and a
Prospectus of Columbia, as well as other relevant documents
concerning the proposed transaction. Shareholders of
Columbia
and Pacific Continental are
urged to carefully read the Registration Statement and the Joint
Proxy Statement/Prospectus regarding the transaction in their
entirety when they become available and any other relevant
documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain
important information. A definitive Joint Proxy
Statement/Prospectus will be sent to the shareholders of each
institution seeking any required shareholder approvals. The Joint
Proxy Statement/Prospectus and other relevant materials (when
they become available) filed with the SEC may be obtained free of
charge at the SECs Website at http://www.sec.gov. PACIFIC
CONTINENTAL AND COLUMBIA SHAREHOLDERS ARE URGED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS AND THE OTHER RELEVANT MATERIALS
BEFORE VOTING ON THE
TRANSACTION.
Investors will also be able to
obtain these documents, free of charge, from Pacific Continental
by accessing Pacific Continentals website at www.therightbank.com
under the link Investor Relations or from Columbia at
www.columbiabank.com under the tab About and then under the
heading Investor Relations. Copies can also be obtained, free of
charge, by directing a written request to Columbia, Attention:
Corporate Secretary, 1301 A Street, Suite 800, Tacoma, Washington
98401-2156 or to Pacific Continental, Attention: Corporate
Secretary, 111 West Seventh Avenue, P.O. Box 10727, Eugene Oregon
97440-2727.
Participants in
Solicitation
Columbia and Pacific
Continental and their directors and executive officers and
certain other persons may be deemed to be participants in the
solicitation of proxies from the shareholders of Pacific
Continental or Columbia in connection with the First Merger.
Information about the directors and executive officers of
Columbia and their ownership of Columbia Common Stock is set
forth in the proxy statement for Columbias 2016 annual meeting of
shareholders, as filed with the SEC on a Schedule 14A on March16,
2016. Information about the directors and executive officers of
Pacific Continental and their ownership of Pacific Continental
Common Stock is set forth in the proxy statement for Pacific
Continentals 2016 annual meeting of shareholders, as filed with
the SEC on a Schedule 14A on March15, 2016. Additional
information regarding the interests of those participants and
other persons who may be deemed participants in the transaction
may be obtained by reading the Joint Proxy Statement/Prospectus
regarding the First Merger when it becomes available. Free copies
of this document may be obtained as described in the preceding
paragraph.
Item9.01. |
Financial Statements and Exhibits |
(d)
Exhibits.
| 2.1 |
Agreement and Plan of Merger, dated as of January9, 2017, by and between Columbia Banking System, Inc. and Pacific Continental Corporation.* |
|
| 99.1 |
Form of Voting and Non-Competition Agreement by and among Columbia Banking System, Inc., and the members of the board of directors of Pacific Continental Corporation, dated January9, 2017. |
|
| 99.2 |
Form of Voting Agreement by and among Pacific Continental Corporation, and the members of the board of directors of Columbia Banking System, Inc., dated January9, 2017. |
|
| 99.3 | Joint Press Release issued January9, 2017. | |
| 99.4 |
Slide Presentation to be made available in connection with investor conference call held on January10, 2017. |
* |
The disclosure schedules and exhibits have been omitted to Item 601(b)(2) of Regulation S-K. Columbia agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| Dated: January10, 2017 | Columbia Banking System, Inc. | |||||
| By: |
|
|||||
| Melanie J. Dressel | ||||||
| President and Chief Executive Officer |
EXHIBIT
INDEX
| 2.1 |
Agreement and Plan of Merger, dated as of January9, 2017 by and between Columbia Banking System. Inc. and Pacific Continental Corporation.* |
|
| 99.1 |
Form of Voting and Non-Competition Agreement by and among Columbia Banking System, Inc., and the members of the board of directors of Pacific Continental Corporation, dated January9, 2017. |
|
| 99.2 |
Form of Voting Agreement by and among Pacific Continental Corporation, and the members of the board of directors of Columbia Banking System, Inc., dated January9, 2017. |
|
| 99.3 | Joint Press Release issued January9, 2017. | |
| 99.4 |
Slide Presentation to be made available in connection with investor conference call held on January10, 2017. |
* |
The disclosure schedules and exhibits have been omitted |
About COLUMBIA BANKING SYSTEM, INC. (NASDAQ:COLB)
Columbia Banking System, Inc. is a bank holding company of Columbia State Bank (the Bank) and West Coast Trust Company, Inc. The Company provides a range of banking services to small and medium-sized businesses, professionals and individuals throughout Washington, Oregon and Idaho. The Bank provides a range of financial services through approximately 150 branch locations in Washington, Oregon and Idaho. The Company’s products and services include personal banking, business banking and wealth management. It offers its personal banking customers a range of account products, including noninterest and interest-bearing checking, savings, money market and certificate of deposit accounts. The Company offers its business banking customers with a range of checking, savings, interest bearing money market and certificate of deposit accounts. It provides individual and business retirement solutions, insurance solutions, wealth management and financial planning. COLUMBIA BANKING SYSTEM, INC. (NASDAQ:COLB) Recent Trading Information
COLUMBIA BANKING SYSTEM, INC. (NASDAQ:COLB) closed its last trading session down -1.02 at 43.31 with 178,946 shares trading hands.
