The board of Spokane, Wash.-based Northwest Bancorp. Inc. had originally planned to pursue an initial public offering but opted to enter into an M&A deal instead, the company said in a regulatory filing.
In February 2018, a few months after tapping D.A. Davidson to be lead underwriter in its IPO, Northwest directed its soon-to-be financial adviser to determine whether there was any company interested in pursuing a deal.
Of the four companies contacted, two showed interest, including First Interstate BancSystem Inc. of Billings, Mont.
In early March, Northwest CEO Russell Lee met with the chief executives of First Interstate and another company that Northwest identified as Bank B. A few days after, First Interstate submitted a nonbinding indication of interest, proposing an all-stock deal with a fixed exchange ratio of 0.5 of a share of First Interstate common stock for each Northwest common share. The consideration was valued at $20.78 per share, or $157.7 million in aggregate.
On March 13, D.A. Davidson met with Northwest's board to discuss the status of the IPO and First Interstate's proposal. Northwest's board noted the risks associated with pursuing the IPO and instructed its management and D.A. Davidson to negotiate certain terms on First Interstate's proposal, as well as to continue discussions with Bank B.
Ten days later, Bank B representatives contacted Northwest and verbally indicated a deal valuation range of $20.50 per share to $21.50 per share.
On March 27, Bank B submitted its nonbinding indication of interest, which included a consideration between $20.09 per share and $21.00 per share, or $152.3 million to $159.3 million in aggregate. First Interstate also submitted a revised proposal for an exchange ratio of 0.516 of one of its common shares for each Northwest Bancorp common share, valuing the target at $20.15 per share, or $152.9 million in aggregate.
Northwest's board decided to accept First Interstate's proposal. Further negotiations lasted almost a month and on April 25, First Interstate and Northwest executed the merger agreement and issued a joint press release announcing the deal.
