The planned merger of FNB Corp. in Christiansburg, Va., and Virginia Financial Group Inc. in Culpeper has gotten a thumbs-up from two independent proxy advisory firms.
Though a vocal group of FNB shareholders continues to oppose the deal, FNB announced late Tuesday that Institutional Shareholder Services Inc. and PROXY Governance Inc. are recommending that FNB shareholders vote in favor of it.
The deal, announced in July, would create the largest banking company based in Virginia, with $3.1 billion of assets. Virginia Financial is to pay $240 million, or $32.43 per share, for FNB, though both companies have the billed the deal as a merger of equals.
The dissident investors, including three FNB directors, have called the price inadequate.
But in its analysis, Institutional Shareholder Services, a Rockville, Md., wrote: "Given that FNB Corp. shareholders would own more than the majority of outstanding shares, with equal board representation, and would contribute equally to the balance sheet of the combined entity, we consider the proposed transaction to be a merger of equals instead of an outright sale. As such, we believe that the proposed transaction does not warrant an acquisition premium."
PROXY Governance, of Vienna, Va., wrote in its analysis, "On balance, the strategic and financial merits of the merger appear reasonable and, as such, we support the transaction."
Kendall Clay, a member of the dissident group and also a member of the FNB board, said Institutional Shareholder Services and PROXY Governance represent the interests of institutional investors, who hold about 15% of FNB's stock. "In my view it's not a recommendation to shareholders," he said. "They could not take into consideration the community interest, which we think is the essence of a community bank."
FNB shareholders are scheduled to vote on the deal Feb. 12.
