FirstMerit Corp.'s latest foray into Florida went sour last week, with the Ohio company and its erstwhile merger partner in Palm Harbor, Fla., filing suit against each other.
Akron, Ohio-based FirstMerit, a $5.7 billion-asset holding company, announced on Feb. 16 an agreement to merge Florida's Madison Savings and Loan Association into its subsidiary Life Savings Bank, Clearwater, Fla., in a $10 million deal expected to close during the third quarter.
However, FirstMerit later said it wanted out of the deal because Madison had failed to disclose pertinent information.
Madison then sued for breach of contract, and FirstMerit sued to nullify the agreement.
FirstMerit "recently discovered material adverse information about Madison's financial condition and operations (that) was known by Madison prior to the execution of the agreement," according to a company news release.
On March 31, FirstMerit said it should be released from its acquisition obligation, according to the lawsuits.
"It's ridiculous," said Robert B. McGivney, Madison's president and chief executive. "There was no material adverse information."
"They had a change in management," he said of FirstMerit. "That may have had some impact. They had a loss in the first quarter."
Representatives from both companies met on April 10 but could not resolve the matter.
On April 11, $145 million-asset Madison filed a complaint in Pinellas County, Fla., against FirstMerit and Life Savings, charging that they breached the acquisition agreement. Madison is seeking more than $15,000 in damages.
Two days later, FirstMerit and Life Savings filed suit in Summit County, Ohio, against Madison, claiming that Madison lowered projected 1995 net income to $428,000 from $972,000 without disclosing the change.