First Niagara Financial Group in Buffalo, N.Y., considered offers from four potential acquirers before deciding in late October to sell itself to KeyCorp.

The $39.4 billion-asset First Niagara first authorized its investment bank, J.P. Morgan Securities, to contact three institutions, including KeyCorp, in late July, according to a recent regulatory filing. The suitors were selected based on the "likelihood of interest, financial capacity, perceived business and cultural fit and perceived potential to obtain required regulatory approvals."

KeyCorp and the other, unnamed institutions each expressed interest in a potential deal, indicating that they could pay $10 to $11.50 a share for First Niagara. In early September, those institutions, along with a fourth party, were given access to an electronic due diligence data room and allowed to participate in a two-round bid process.

The fourth institution indicated in mid-September that it was interested in a deal that valued First Niagara at $10.50 to $11.50 a share. Less than a week later, one of the initial institutions dropped out of the process.

By that time, media reports began circulating that First Niagara was weighing its options, sending the company's stock price soaring by 15%. The filing notes, however, that no other institutions approached First Niagara about a deal after the reports surfaced.

In early October, the remaining suitors provided new indications of interest. KeyCorp offered 80% stock, along with $784 million in cash, in a deal that valued First Niagara at $11 a share. The other institutions offered all-stock deals valuing the company at $9.75 to $11.50 a share.

Given the reports of a possible sale, First Niagara's board became concerned that its stock could suffer an "immediate and material" decline if the company decided to remain independent, the filing disclosed. By mid-October, another institution left the auction process.

On Oct. 25, the $93.1 billion-asset KeyCorp and the other suitor provided revised drafts of their proposed merger agreements. Notably, KeyCorp agreed to add three First Niagara directors to its board, contribute $20 million to the First Niagara Foundation and "use commercially reasonable efforts to support a meaningful employee presence in western New York."

KeyCorp, which is based in Cleveland, offered $11.49 a share in the final round of bidding, while the other suitor offered $11.05 a share. First Niagara's board opted to work with KeyCorp because of "the higher indicative value" of its proposal. First Niagara's board also considered the cultural fit, the outlook for KeyCorp's shares and KeyCorp's ability to secure timely regulatory approval.

First Niagara ended discussions with the other institution shortly before announcing its $4.1 billion sale to KeyCorp on Oct. 30.

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