The biggest investor in Middleburg Financial plans to withhold support for the Virginia company's director nominees.
David Sokol, chief executive of Teton Capital in Jackson, Wyo., has been pushing the $1.3 billion-asset company to sell itself. Sokol, who made his first investment in Middleburg in 2009, individually owns about 30% of the company's stock.
"I believe it is clear that [Middleburg] has more value as part of a larger bank than on a standalone basis," Sokol wrote in an April 20 letter addressed to the company's directors. "If the board believes that a status quo/go-it-alone plan will provide more value to shareholders it should make that plan and all of its assumptions available to shareholders. I look forward to a timely response."
Sokol's decision to withhold support for board nominees may be more of a symbolic move because Middleburg has plurality voting for directors.
Sokol said he recently hired a law firm and an investment bank that specialized in bank M&A to assist him me "in realizing the intrinsic value" of his Middleburg investment. "I believe that there is no prospect that [Middleburg's] own growth initiatives can offset the negative market conditions impacting it and other community banks, including increased competition for customers, costly regulatory compliance and general economic uncertainties," Sokol added.
A Middleburg spokeswoman noted earlier in the week that the company was aware of Sokol's concerns.
"Our board … and management team value the views of all shareholders and welcome input towards the goal of enhancing shareholder value," the spokeswoman said in an email. "We have appreciated our long-standing relationship with Mr. Sokol and look forward to maintaining our constructive dialogue. We remain committed to executing on our strategic initiatives to grow the business, deliver robust financial performance and enhance shareholder value."