First Interstate, Great Western announce $2B merger

First Interstate BancSystem in Billings, Mont., has agreed to buy Great Western Bancorp in Sioux Falls, S.D. 

The $18.9 billion-asset First Interstate said in a press release Thursday that it will pay $2 billion in stock for the $13 billion-asset Great Western. The deal is expected to close in the first quarter. 

“This is a transformative moment for our 53-year-old company,” Kevin Riley, First Interstate’s president and CEO, said in the release. 

"The strategic and cultural alignment between our organizations is what makes this transaction so exciting, as we both pride ourselves on being community banks with a strong focus on relationship building, customer service and community outreach,” Riley added. 

Five Great Western directors will join First Interstate’s board. Mark Borrecco, Great Western’s president and CEO, will join First Interstate as chief banking officer. 

First Interstate also said its existing dual-class stock structure will end at the record date of its next annual meeting. The plan is to roll all Class B common stock into Class A stock, at which point First Interstate will no longer be a controlled company. 

The Scott family will remain significant shareholders and family members will continue to serve in board positions post-transaction.  

First Interstate said it expects the deal to be 20% accretive to its 2023 earning per share, taking into account cost savings. The acquisition is also expected to be accretive to the company’s tangible book value per share.

First Interstate expects to incur $140 million of merger-related expenses. The company plans to cut about a fifth of Great Western’s annual noninterest expenses, or $56 million. 

Keefe, Bruyette & Woods, Barclays and Davis Polk & Wardwell advised First Interstate. Piper Sandler and Wachtell, Lipton, Rosen & Katz advised Great Western. Goldman Sachs and Latham & Watkins advised the Scott Family FIBK Shareholder Group.