Lawsuit filed over sale price of Nevada bank’s parent company
24 September 2012
A shareholder in Service1st Bank of Nevada’s parent company has filed a class-action lawsuit against the lender and its board of directors, alleging they are selling the Las Vegas bank at an unfair price.
David Raul filed his complaint Friday in Clark County District Court. He alleges the board of Western Liberty Bancorp breached its fiduciary duties by agreeing to sell the company to Bank of Nevada’s parent, Western Alliance Bancorp., for “grossly inadequate consideration.”
The deal has been valued at $55 million.
Raul further alleges that by cutting a deal with Western Alliance, Western Liberty “inexplicably” abandoned the sales process it began in mid-2011, “despite having interest from at least eight parties.”
Among other things, Raul is seeking class-action status for him and other Western Liberty shareholders, as well as unspecified damages. He also named Western Alliance as a defendant in the suit.
Such lawsuits are common when publicly traded companies agree to be bought out, with shareholders arguing for a higher sales price.
Bill Martin, CEO of Service1st and its parent, could not immediately be reached for comment Monday. A spokesman for Western Alliance also could not be reached.
Phoenix-based Western Alliance announced Aug. 17 it signed a definitive agreement to buy Western Liberty.
The deal is expected to close this fall, and at that point, Service1st will merge into Bank of Nevada.
Under the terms of the deal, Western Liberty shareholders can choose to receive either $4.02 in cash or 43 percent of a share of Western Alliance for each share they owned in Western Liberty.
Shares of Western Liberty soared in the first full trading day after the deal was announced. Its stock jumped 34 percent on Aug. 20 to $3.82 per share, up from $2.85 on Aug. 17. It was the largest percentage gain that day of any company listed on the Nasdaq Stock Market or the New York Stock Exchange.
The stock has since climbed even higher, closing at $4.04 per share on Monday.
Bank of Nevada had 12 branches in Southern Nevada as of last summer and nearly $2.5 billion of local deposits. Service1st had two branches in the region and $132 million of deposits, according to the most recent federal regulatory data.
Western Liberty plans to close one of its branches, located at 8965 S. Eastern Ave. The branch had roughly $36 million of deposits as of last summer.
By comparison, Service1st’s main office, at 8349 W. Sunset Road in Las Vegas, holds $96 million of deposits.
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