A securities law firm has filed a class-action suit to halt Renasant's (RNST) acquisition of First M&F Corp (FMFC).
The complaint, filed Monday in U.S. District Court for the Northern District of Mississippi by Robbins Geller Rudman & Dowd, alleges that First M&F's management violated its fiduciary duty in agreeing to the Renasant's $119 million acquisition offer.
It claims that First M&F Chairman and Chief Executive Hugh Potts and the board of directors relied on conflicted analysis from Keefe, Bruyette & Woods, its advisor, and provided its shareholders with inadequate information about the proposed takeover by the company in Tupelo, Miss.
"The takeover of FMFC favors Renasant, benefits Potts and his management team, and is detrimental to FMFC's shareholders," the complaint says.
In February, the $4.2 billion-asset Renasant agreed to pay 119% of First M&F's tangible book value to acquire the lender in Kosciusko, Miss.
The suit claims that the agreement resulted from a "fundamentally flawed process" and criticized First M&F management for failing to seek bids higher than Renasant's. It also claims that the agreement includes deal-protection devices that discourage other banks from beating Renasant's offer.
Negotiations began when Renasant CEO Robinson McGraw made an unsolicited phone call to Potts, the First M&F CEO said on a conference call with shareholders in February. He called McGraw an "old friend" and noted that transaction was negotiated and "not an auction."
Neither company could immediately be reached for comment.