In an unusual move, Millennium Bankshares Corp.'s shareholders have rejected its bid to buy a small, Charlottesville, Va., banking company and left Millennium's management with little choice but to call off the deal.
Millennium, of Reston, said Tuesday that it had terminated the deal, announced in June, to buy the $120 million-asset Albemarle First Bank for roughly $29 million.
Among those who voted against the deal at a shareholder meeting Monday was Anton V. Schutz, the president of Mendon Capital Advisors Corp. in New York, who called the deal for the struggling Albemarle a "destructive" one.
"I see it as a lot of risk and not a lot of upside for the shareholders," said Mr. Schutz, whose firm owns a 2.7% stake in Millennium. "I'm glad it was defeated."
Millennium's stock soared after the termination was announced. In heavy trading the shares rose 9.1%, to close at $8.50. Shares of Albemarle, whose shareholders approved the deal Monday, fell 14.2%, to close at $11.15.
The $410 million-asset Millennium had initially agreed June 9 to buy Albemarle for $15.82 a share, but the price was reduced to $15.80 a share in late September to account for additional stock options of Albemarle.
It is rare for shareholders to reject a merger agreement and even rarer for a buyer's stockholders to vote against one.
In this case, they seemed less than pleased with what Millennium would be getting. Albemarle has had only two profitable years - 2004, when it earned $101,000, and 2000, when it earned $357,000. In the first nine months of this year it earned $65,000. The bank has lost just over $3 million since its inception in 1998.
Tom Boyd, Albemarle's president and chief executive officer, said that he had expected the deal to be approved and was "disappointed" that Millennium's shareholders nixed it.
Mr. Boyd said that it was "too early to tell" if the deal could be revived, and that its collapse would not discourage his company from future deals.
"If another deal comes along sometime in the future, obviously we'll look at that," he said. "Albemarle First will carefully consider strategic alternatives to maximize shareholder value, and we're working with our financial advisers in this regard."
Calls to Millennium's president, chairman, and CEO, Carroll C. Markley, requesting comment on the deal were not returned. In a news release, the company said it expects to record transaction expenses of $500,000 to $600,000 this quarter.
Albemarle has three branches, all in Virginia. The 6-year-old Millennium has seven, most in the Washington suburbs. It reported a $1.5 million profit for the first three quarters of the year.
