By Sarah Robinson/NEMS Daily Journal
A lawsuit was filed Monday to block the recently announced merger of Renasant Corp. and First M&F Corp. in Northern Mississippi district court.
The lawsuit was submitted by the San Diego-based law firm of Robbins Geller Rudman and Dowd on behalf of Sherman Zeng of Michigan. Zeng confirmed that he is a shareholder in M&F but declined to comment on a specific reason for filing the suit.
The deal, announced on Feb. 7, would make Renasant the state’s fourth-largest bank by deposits.
The $119 million stock transaction would give First M&F shareholders 0.6425 shares of Renasant stock for each share of M&F stock.
Both companies’ boards have approved the deal, which still must meet shareholder and regulatory approval.
Renasant said it expects to close the merger by the third quarter of this year.
First M&F Chairman and CEO Hugh Potts said that while he cannot comment on pending litigation, this type of lawsuit is common.
“In 95 percent of merger deals among publicly traded companies that have a deal value of $100 million or more,” you see this type of suit, he said. “This is an extremely common occurrence with virtually the same allegations every time.”
According to court documents, the lawsuit alleges “The takeover of FMFC favors Renasant, benefits Potts and his management team, and is detrimental to FMFC’s shareholders.”
Potts said based on the financial analysis performed prior to announcing the planned merger, the deal will benefit shareholders.
“There will be a resumption of dividend payments which have only been nominal since 2009,” he said.
Potts said he was not aware of Zeng having any personal dealings with the Kosciusko-based bank. According to court documents, Zeng owns just 200 shares of M&F stock that he purchased on Jan. 22, 2013 – two weeks before the merger was announced.
“I do expect the merger to take place,” Potts said.
The Baker Donelson law firm in Jackson will represent First M&F. Renasant declined to comment on the suit.
Steve Corban, general counsel for Renasant, said it has a policy of not commenting on any pending legislation.