A group of shareholders and directors at FNB Corp. in Christiansburg, Va., are urging fellow shareholders to reject its proposed merger with Virginia Financial Group Inc. in Culpepper.
In a filing last week with the Securities and Exchange Commission, the group said that even though the two companies billed the deal as a merger of equals, it is actually a sale with little premium. The group said its members include three FNB directors — who voted against the deal in the board vote — and a director at its First National Bank.
When they announced the deal July 26, FNB and Virginia Financial said it would create the state's largest banking company, with $3 billion of assets.
The opposition group, which calls itself the FNB Corp. Shareholders Committee, said in the SEC filing that the company did not seek out any other bidders before agreeing to a deal that is not in the best interests of its shareholders, its employees, or the community.
The shareholders committee says that the transaction is taking the form of an acquisition, with Virginia Financial buying FNB for roughly $240 million in stock, or about $32.43 a share. That would be a premium of about 4% over FNB's closing price the day before the deal was announced.
"If we were going to sell, which I oppose, we should have found a merger partner who would have paid the premium our shareholders deserve," Kendall O. Clay, a Radford lawyer and an FNB director, said in a press release. "We are told by advisers that based on other transactions, we could have expected $52 to $58 per share."
William P. Heath Jr., FNB's president and chief executive officer, said in a prepared statement that the committee's SEC filing is "factually inaccurate and misleading." FNB shareholders would own 52% of the post-merger company, and it is "a mischaracterization" to refer to the merger as a sale.
FNB devoted six months to "a careful analysis of the strategic alternatives available" before choosing to partner with Virginia Financial, Mr. Heath said.
First National Bank has 27 branches and $1.5 billion of assets. Virginia Financial is the holding company for the $703 million-asset Second Bank and Trust and the $848 million-asset Planters Bank and Trust Co. of Virginia. The two banks have 41 branches combined.
The deal is expected to close next quarter.
