A local bank has cleared a legal speed bump as it heads for the finish line in a $2.7 billion deal.
One of the two lawsuits filed against the parent company of Xenith Bank by shareholders, seeking to block its pending deal to be acquired by Union Bank & Trust, has been dismissed.
The case, filed Sept. 7 in Richmond federal court, was voluntarily dismissed by the plaintiff Nov. 7, court records show.
It was the first of two similarly worded suits seeking class action status and attempting to prevent the deal. They alleged Xenith omitted information in documents related to the Union deal and claimed violations of provisions of the Securities and Exchange Act.
The suits are part of a legal trend that’s become a kind of rite of passage for most mergers and acquisitions involving publicly traded companies. Executives of companies see them as little more than the white-collar equivalent of ambulance chasers, but it’s a trend companies are forced to plan and budget for when crafting deals.
Such cases often end with little consequence, either being dismissed or settled after the parties agree to tweak certain disclosures in SEC filings.
The Union-Xenith deal is on track to close at yearend. It already has received the thumbs up from shareholders of both companies and state and federal regulators. The marriage will combine Xenith’s $3 billion in assets with Union’s $9 billion, creating a $12 billion Richmond-based statewide banking behemoth.
The dismissed suit was filed by Xenith shareholder Paul Parshall against Xenith Bankshares, CEO Gaylon Layfield and directors James Burr, Patrick Corbin, Henry Custis Jr., Palmer Garson, Robert Goldstein, Edward Grebow, William Paulette, Lewis Witt, Robert Merrick, Scott Reed and Thomas Snead Jr.
The second case, filed Sept. 19 by Xenith shareholder Shannon Rowe, is still pending. The bank has yet to file a response, according to court records.
Regarding the pending case, CEO Layfield said in an email, “We continue to believe there is no basis for the claims.”