PITTSBURGH (Legal Newsline) - A class action lawsuit was filed on Monday seeking to bar a merger between two banks over allegations that the deal was done by an unfair process.
Plaintiff James Elliott holds stock in ESB Financial, which announced on Oct. 29 that it had reached an agreement to sell the company to WesBanco, a bank-holding company based in West Virginia.
The merger, worth about $324 million, involved both cash and stock purchases. ESB shareholders would receive $1.76 plus half a share of WesBanco common stock for every ESB share owned.
Elliot alleges the agreement is unfair and a breach of the board of director's fudiciary duties. He alleges ESB President and CEO Charlotte Zuschlag stands to benefit from the merger due to ESB accelerating the vesting of outstanding shares of restricted stock.
Elliot further alleges WesBanco's registration statement to the Securities and Exchange Commission, filed on Nov. 20, contains misstatements and omissions. The statement allegedly fails to disclose WesBanco's sales process and ESB's financial projects.
Elliot contends ESB has been performing well since April, including seeing a net income increase of $626,000 in the first quarter of 2014.
The lawsuit seeks to stop the merger or improve the offer to ESB shareholders.
Elliot is represented by Alfred G. Yates Jr. and Gerald L. Rutledge, of the Law Office of Alfred G. Yates Jr., and Evan J. Smith and Marc L. Ackerman, of Brodsky & Smith.
United States District Court Western District of Pennsylvania case number 2:14-cv-01689