A settlement is in the works to end a class action lawsuit tied to a massive Richmond banking deal.
StellarOne Bank and locally based Union First Market Bankshares have reached a settlement in principle with a StellarOne shareholder who filed suit this summer to block the banks’ pending $445.1 million combination or win damages.
Both sides are in the process of finalizing an agreement, according to federal court records. No specifics of the settlement have been disclosed.
Resolving the case would help clear the way for the deal, which is expected to close in January and has been approved by state and federal regulators. Union shareholders are set to vote on the proposal Dec. 5.
As proposed, Union will acquire StellarOne and its Charlottesville parent company. StellarOne shareholders would receive 0.97 shares of Union common stock for each of their StellarOne shares.
The combination would result in a $7 billion bank with more than 120 branches covering much of Virginia and with its headquarters in downtown Richmond.
The lawsuit was filed June 14 against StellarOne, its board of directors and Union First Market by StellarOne shareholder Jaclyn Crescente on behalf of herself and her fellow shareholders.
News of the pending acquisition brought out a gang of class action lawyers from across the country in search of potential disgruntled plaintiffs. The New York firm of Faruqi & Faruqi was able to coral Crescente as a lead plaintiff.
Crescente’s case alleges that StellarOne Corp., the Charlottesville-based parent of StellarOne Bank, along with 13 of its directors breached their fiduciary duty to shareholders by engaging in the pending deal.
The suit alleges that the merger process was flawed and the deal will unfairly deprive Crescente and other StellarOne shareholders of the true value of their investment in the bank.
Union is named as defendant in the suit for “aiding and abetting” StellarOne’s alleged breach of fiduciary duty.
Both banks have filed motions to have the case tossed out.
Union’s motion for dismissal filed July 26 called the suit “ludicrous” and “woeful.” StellarOne said it was “hastily-filed” and without merit.
Such suits are common on the heels of large merger and acquisition announcements.
Union is represented in the case by LeClairRyan attorneys Charles Sims and Michele Burke.
Alan Wingfield and H. Scott Kelly from the Richmond office of Troutman Sanders represent StellarOne.