Tacoma's Columbia Banking System, the holding company of Columbia State Bank, has inked an acquisition agreement with West Coast Bancorp of Oregon, pursuant to which Pacific Northwest community bank franchises of both parties will be merged in a deal valued at $506m.

The deal, which is expected to close during the first quarter of 2013 after receiving necessary regulatory approval, will strengthen Columbia Bank’s presence in Washington and Oregon regions.

The merged entity will have nearly $7.2bn in assets with a network of 150 branches across Washington and Oregon, the acquirer said.

West Coast shareholders can select to receive either Columbia common stock, cash, or a grouping of both stock and cash for each share of West Coast stock, which is subject to allocation procedures.

In exchange for all of West Coast’s capital securities, the cumulative consideration offered consists of a fixed amount of cash summed up to nearly $264.5m and Columbia common stock totaling 12.8 million shares.

As per the terms of the agreement, West Coast shareholders will own nearly 24% of the common stock of the combined company and will be offered consideration valued at approximately $23.10 per share, the bank said.

Keefe, Bruyette & Woods offered financial advice to Columbia Banking, while Graham & Dunn served as legal counsel to the bank.

Sandler O’Neill + Partners acted as a financial advisor for West Coast, and Wachtell, Lipton, Rosen & Katz worked as legal counsel.

Headquartered in Tacoma, Washington, US, Columbia Banking System is a Washington state-chartered full-service commercial bank.

Headquartered in Oregon, US, West Coast Bancorp is a publicly held, Northwest bank holding company with $2.4bn in assets, and also the parent company of West Coast Bank and West Coast Trust Company.