Is Center Bancorp Inc. in Union, N.J., trying to back out of its deal to acquire Beacon Trust Co.?
Beacon, in Madison, N.J., says so and is asking the New Jersey Superior Court to compel Center to complete the $10.3 million deal, even if it fails to close by a Dec. 15 deadline.
In a complaint filed Oct. 5, the privately held Beacon said that the $1 billion-asset Center is purposely "dragging its feet" and that Lawrence B. Seidman, one of Center's board members, wants to renegotiate the deal or escape from it.
Mr. Seidman, a Center investor who has been complaining about the company's performance for years, won a seat on its board May 30 after a proxy contest. He had said in March when the Beacon deal was announced that Center did not give enough detail about it.
He declined Thursday to comment on Beacon's claims. Acting president Anthony C. Weagley did not return a phone call.
Mr. Weagley, who is also the company's chief financial officer, became acting president when John J. Davis retired in August. Mr. Davis had been bumped from his board seat when Center's slate lost the proxy contest.
Shortly before the board election, Center agreed to examine its strategic options, including a possible sale, in a move observers considered a last-ditch effort to defeat Mr. Seidman's slate.
Michael Horn, a partner at McCarter & English LLP in Newark, N.J., who is representing Beacon, said the company would not comment beyond the complaint.
Under the deal, Beacon would become a subsidiary of Center and keep its name and management team. The deal had been expected to close by the end of the third quarter, though it allowed for an extension up to Dec. 15.
Bret Ginesky, an analyst at Stifel Nicolaus & Co. Inc., said it appears to him that current management is less than enthused about acquiring Beacon. "This deal came about under different management," he said. "Perhaps this lawsuit is insight into the current management's acceptance of the deal."
But, Mr. Ginesky said, Center still has two months to do an S4 filing with the Securities and Exchange Commission, which is needed to issue the stock Center must pay as part of the deal.
Beacon said in the complaint that Mr. Seidman, speaking for Center at a Sept. 18 meeting, warned that Center's board might not approve the S4 filing at its meeting later that month. Center subsequently failed to approve the filing.
"It has become clear to Beacon during recent weeks that the new board of directors is attempting to undermine the merger," the complaint says.
Beacon also said that it asked Center to extend the closing deadline and that Center refused without any explanation.
