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Veritex-Sovereign deal process terminated twice but eventually led to agreement

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Veritex-Sovereign deal process terminated twice but eventually led to agreement

Various depository institutions including Veritex Holdings Inc. approached Sovereign Bancshares Inc. starting in late 2014 through 2015 about a potential deal.

It was Feb. 22, 2016, when Veritex provided Sovereign a draft nonbinding letter of interest that contemplated Veritex acquiring all of the issued and outstanding Sovereign common stock in a cash-and-stock transaction.

Another bank offered to acquire Sovereign, for about $130 million, comprised of $65 million in cash and the balance in shares. Sovereign terminated discussions with Veritex.

But Sovereign and the other bank were unable to reach mutual agreement with respect to the terms of a definitive agreement. They terminated further negotiations and diligence review on or about April 13, 2016.

The CEOs of Veritex and Sovereign discussed the potential for a merger again July 20, 2016. Sovereign received a nonbinding indication of interest from Veritex on July 29, 2016, that provided for the acquisition of Sovereign in a 60% stock/40% cash transaction for about $152 million, based on then current market prices of Veritex common stock.

The parties were ultimately unable to come to an agreement on certain material terms of a definitive agreement and agreed to terminate the indication of interest on Sept. 13, 2016.

Management of Veritex and Sovereign reinitiated contact regarding a potential transaction in early November 2016.

On Nov. 11, 2016, Sovereign received a new nonbinding indication of interest from Veritex, which wanted to buy Sovereign for roughly $159 million, based on a proposal consisting of $58 million in cash and 5,117,647 Veritex common shares and then current market prices of Veritex common stock.

The Dallas peers entered into the merger agreement Dec. 14, 2016.