Persistence still pays in today’s banking M&A world.

First Interstate BancSystem in Billings, Mont., missed out on two opportunities to snag Cascade Bancorp before agreeing to buy the Bend, Ore., company in November. Executives of the $9.1 billion-asset First Interstate repeatedly checked in with Cascade last year, helping them eventually land the $589 million deal, according to a regulatory filing tied to the planned merger.

The $3.2 billion-asset Cascade put itself into play in May 2015 when it started talking to an unnamed bank. Cascade’s board authorized its financial adviser at the time to contact four other potential suitors.

First Interstate wasn’t among them.

Cascade eventually signed an exclusivity agreement with the unnamed bank when the other prospects declined to proceed, the filing said. However, Cascade and the other bank were unable to reach a deal and ended discussions in August 2015.

First Interstate contacted Terry Zink, Cascade’s president and CEO, early last year, as did an executive at one of the banks that Cascade had reached out to in 2015. First Interstate and the other bank entered into confidentiality agreements with Cascade and began conducting due diligence in March.

Each bank submitted cash-and-stock offers to Cascade in mid-May. First Interstate’s initial bid of $6.19 a share was 3% lower than what the other bank presented. During a second round of bidding in late May, First Interstate’s offer remained slightly lower than that of the other interested party.

Cascade’s board had other reasons to prefer the unnamed bank’s offer over what First Interstate provided, the filing said. The board believed it could complete a deal with the unnamed bank “more promptly than a strategic transaction with First Interstate.” Directors also thought a merger with the other party would be a better match.

Another complicating factor was First Interstate’s dual-class ownership structure. Cascade, which had been offered Class A shares, was concerned about the concentrated voting rights of First Interstate’s Class B shares, particularly if First Interstate ever decided to sell itself.

Cascade and the other bank entered into an exclusivity agreement on June 1, leaving First Interstate on the outside looking in. Still, First Interstate and its financial adviser on multiple occasions reached out to Cascade or its representatives to express continued interest in a deal.

Over the summer, the unnamed bank’s stock price fell, reducing the value of its offer as of late July by 5%, to $6.14 a share. The suitor adjusted its exchange ratio to include more cash.

Despite several extensions of the exclusivity agreement, Cascade and the other bank could not reach a consensus. Cascade was released from its exclusivity obligations on Aug. 30.

That left a new opening for First Interstate.

Kevin Riley, First Interstate’s president and CEO, contacted Zink two days after Cascade’s discussions with the other bank ended. Later that month, First Interstate proposed paying $6.87 a share in cash and stock, an amount that topped its previous offer by about 7%. The new offer included a collar to account for potential sways in First Interstate’s stock price.

Cascade and First Interstate entered into an exclusivity agreement in late September. The companies negotiated several important terms, including the number of Cascade directors who would join First Interstate’s board and Cascade’s concerns about First Interstate’s dual-class ownership structure.

First Interstate, after some back and forth, agreed in November to amend its articles of incorporation to provide additional protections to Class A shareholders. Notably, First Interstate made changes to require a supermajority vote of Class A shareholders if their considerations would be different than those of Class B investors in the event of a future sale.

Cascade’s comfort level increased; its board unanimously approved the deal on Nov. 16. First Interstate’s directors ratified the pact a day later and it was announced that day. By that time, the value of the deal had risen to $7.60 a share.

The deal, which is expected to close in mid-2017, was the seventh-biggest bank merger announced last year.

The acquisition would push First Interstate well above the $10 billion-asset threshold, where it would face caps on interchange fees and mandatory stress testing. It also provides a partial cash out for Green Equity Investors, WL Ross & Co. and Lightyear Capital, which have significant stakes in Cascade.

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