Home BancShares in Conway, Arkansas, pushed back Thursday against claims it omitted critical information from the proxy filing detailing its
In a supplemental filing with the Securities and Exchange Commission, the $17.8 billion-asset holding company for Centennial Bank disclosed a series of tables compiled by its investment bankers illustrating the valuations of comparable companies in Texas and around the country, as well as the consideration paid in selected recent deals.
Home also disclosed a projection indicating that the $6.4 billion-asset Happy Bancshares has the potential to generate adjusted net income totaling $83.4 million in 2026, or 39% more than it earned in 2020.
Last month, a disaffected investor filed suit in the U.S. District Court for the Southern District of New York, seeking more information about how Home Bancshares arrived at the $919 million price tag.
Pate Pearson alleged disclosure gaps in Home’s original, 179-page proxy, filed with the SEC on Oct. 22, “[deprived] plaintiff of the information necessary to make an intelligent, informed and rational decision” as to transaction’s merits.
The implied per share price of $47.24 works out to about 166% of Happy’s tangible book value per share. In bank deals announced through September of this year, the median sale price is equal 151.8% of the seller’s tangible common equity, according to data from S&P Global.
In the current events report it filed Thursday, Home characterized Pearson’s suit as “without merit” and denied “that any supplemental disclosure was or is required.” Home said it chose to release additional information specifically to avoid the “nuisance, potential expense and delay” of fighting Pearson’s action in court.
Jack Siegal, a partner and commercial litigation attorney at McGlinchey Stafford, said Home’s supplemental filing Thursday will likely be enough to blunt Pearson’s complaint, which asked the court to block a vote by Home shareholders scheduled for Dec. 15.
“What more does this complainant have to complain about,” Siegal said Thursday. “If the numbers weren’t favorable,” he added, Home Bancshares “would probably not have” released additional information.
Merger-objection lawsuits featuring plaintiffs claiming they lack adequate information are common in deals where the consideration exceeds $100 million, according to Jason Vigna, a partner at Mintz Levin. Such suits had been predominantly filed in Delaware state courts until 2016, when a judge ruling on a merger-objection suit involving Zillow Inc.’s acquisition of Trulia Inc. said that such suits “rarely yield genuine benefits for stockholders.” Since then, the venue has shifted to the federal courts, Vigna said.
Evan Smith, the attorney for Pearson, did not immediately respond to a reporter’s request for comment.
Home Bancshares announced the Happy acquisition in September. Home has been an active acquirer under Chairman and CEO John Allison, but the deal for Happy State Bank would be its first bank acquisition in Texas.
