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Prosperity Bancshares, LegacyTexas explored deal as early as 2017

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Prosperity Bancshares, LegacyTexas explored deal as early as 2017

LegacyTexas Financial Group Inc. held preliminary discussions with a few parties, including Prosperity Bancshares Inc., way back in late 2017, but none led to a merger agreement.

In February 2018, LegacyTexas CEO Kevin Hanigan met with Prosperity CEO David Zalman in Dallas to resume discussions concerning a potential merger between the two companies. The following month, LegacyTexas' board determined to end communications due to the lack of clarity on the transaction.

In light of M&A developments in the financial services industry, Hanigan contacted Zalman in February and discussed the prospect of restarting discussions concerning a merger.

On March 20, Zalman offered proposed terms for a merger that included a fixed exchange ratio premium of 10%. Prosperity submitted a revised proposal to LegacyTexas on May 28, which included a consideration mix of 80% stock and 20% cash and a 12.5% premium to LegacyTexas' then-current stock price. LegacyTexas' board later on proposed, among other things, that any consideration to be paid by Prosperity should be 85% stock and 15% cash.

LegacyTexas and Prosperity eventually proposed a final consideration mix of 0.5280 of a Prosperity common share and $6.28 in cash for each LegacyTexas common share.

The transaction was announced June 17.

Plano, Texas-based LegacyTexas would pay Houston-based Prosperity a termination fee of $82 million should the deal fall through under certain circumstances.