Suit aims to block Intermountain, CBS merger

SANDPOINT — An Intermountain Community Bancorp stockholder is bringing a class action lawsuit to derail the company’s merger with Columbia Banking System.

Counsel for Alan Kahn contends Intermountain, the parent company of Panhandle State Bank, is being undervalued in the proposed merger and inadequately compensates shareholders.

Kahn is seeking class action certification due to the volume of Intermountain shareholders and an injunction to stop the merger with Columbia. The suit was filed in 1st District Court on Aug. 26.

Named as a defendants are Intermountain, its board of directors, Columbia, Stadium Capital Partners and Castle Creek Capital Partners IV. The latter two defendants are Intermountain’s largest stockholders, according to the suit.

The proposed merger was announced in July. It was billed as way for both companies to extend their reach in Idaho, Washington and Oregon.

But Kahn alleges that the merger will do more to benefit Intermountain CEO Curt Hecker, Stadium and Castle Creek than shareholders. Kahn contends that the proposed merger would constitute a small, 7-percent premium to Intermountain’s stock price, which is lower than the average premiums in other takeovers of similarly-sized commercial banks.

Kahn further alleges that the defendants also agreed to various deal-protection devices, including a $4.5 million penalty if Intermountain tries to terminate the deal should a higher bidder emerge.

“These Defendants have failed to take adequate measures to ensure that the interests of Intermountain’s stockholders are properly protected and have embarked on a process that avoids little competitive bidding and provides Columbia with an unfair advantage by effectively excluding alternative proposals,” Boise attorney Eric Rossman said in the 24-page complaint.

First District Judge Barbara Buchanan voluntarily disqualified herself from presiding in the case. The nature of the disqualification does not require Buchanan to state why.

The suit accuses the defendants of breaching their fiduciary duties and aiding and abetting the breach of those duties.

An answer to the complaint is pending.

A message seeking comment from Hecker on Friday was routed to an Intermountain spokeswoman who said Hecker was not at liberty to comment on the matter due to the pending merger.