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Pacific Premier seals Heritage Oaks deal after rival stutters in deal talks

In August 2015, Irvine, Calif.-based Pacific Premier Bancorp Inc. contacted Paso Robles, Calif.-based Heritage Oaks Bancorp for a potential merger. Heritage Oaks had earlier rejected a similar potential transaction with a southern California business bank as it focused on a consent order it had received from regulators.

Heritage Oaks tapped Sandler O'Neill & Partners' services to assist in its negotiations. Sandler contacted about seven potential partners for Heritage Oaks.

On Sept. 22, 2015, however, Heritage Oaks ceased communication with potential partners in order to focus on addressing its consent order.

In 2016, four companies expressed interest to enter a deal with Heritage Oaks-- Company A, Company B, Company C, and Pacific Premier, which re-contacted the bank. Heritage Oaks asked Company A and Pacific Premier to submit their indication of interest.

In their initial proposals, both companies offered 100% stock consideration, with Company A's proposal allowing Heritage Oaks the option to receive 10% of the consideration in cash. Heritage Oaks noted Company A did not experience significant growth over several years as compared to Pacific Premier, which had considerably grown over the years.

Considering their proposals, however, Heritage Oaks decided to move forward with Company A and requested it to contact its regulators and inquire about the potential impact of Company A's regulatory issues on securing approval for their planned deal.

But Company A did not put urgency in contacting its regulators and Heritage Oaks, which kept an open communication with Pacific Premier, began negotiating the terms of a potential merger.

On Nov. 22, 2016, Heritage Oaks terminated the deal process with Company A as it still had not given substantial update on its regulatory issues.

Heritage Oaks and Pacific Premier then proceeded to finalize the terms of their deal, which was publicly announced Dec. 13, 2016.