Bremer Financial in Minnesota files lawsuit to thwart takeover attempt

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Bremer Financial in St. Paul, Minn., has filed a lawsuit in hopes of thwarting a takeover and attempted sale by its biggest shareholder.

The $13 billion-asset company said in a press release last week that it filed a lawsuit in the Ramsey County, Minn., District Court against the Otto Bremer Trust and its three trustees. The trust is a charitable organization that has held a large percentage of Bremer’s shares since 1944. The trustees serve on Bremer's board.

Bremer claims in its lawsuit that the trust in late October announced plans to transfer a portion of the company's nonvoting stock to 19 out-of-state hedge funds with the goal of converting it into voting shares, replacing Bremer's board and selling the bank.

The lawsuit calls the trust's plan a "disloyal scheme" aimed at enriching the trustees at the expense of communities served by Bremer. It claims that the sales are prohibited by the Otto Bremer Trust agreement.

“In filing this lawsuit, the board is carrying out its fiduciary obligation to ensure that any transfer of Bremer ... shares is valid and consistent with [the trust's and the company's] organizational documents, which reflect [founder] Otto Bremer’s vision to harness the power of banking to drive economic growth and to support our communities,” Bremer Chairman Ronald James said in the release.

The lawsuit seeks a judgment declaring the stock transfers invalid and to prevent the trustees from transferring Bremer shares or engaging in discussions with potential buyers without board authorization. It claims that the trustees, in the first half of 2019, had "extensive unauthorized discussions" with potential acquirers and that they shared confidential information without authorization.

Bremer's board determined in August that a sale "would destroy shareholder value and would not be in the best interests of Bremer’s employees or the communities where it operates," the lawsuit said.

“We are extremely disappointed that [the trust's] reckless unilateral actions have undermined a partnership that has delivered for the people of Minnesota, North Dakota and Wisconsin for more than 75 years,” Jeanne Crain, Bremer's president and CEO, said in the release.

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