WashingtonFirst Bankshares, Sandy Spring Sued Over Potential Merger

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WashingtonFirst Bankshares, Inc., members of its board of directors, Sandy Spring Bancorp, Inc., and subsidiary Touchdown Acquisition, Inc. are facing a proposed securities class action filed on behalf of WashingtonFirst stockholders. The suit is centered around the potential acquisition of WashingtonFirst Bankshares by Sandy Spring, which the companies announced on May 16, 2017. The plaintiff takes issue with the defendants’ allegedly “false and misleading” registration statement filed with the U.S. Securities and Exchange Commission in connection with the proposed transaction. He claims the companies omitted material information from the statement that “would significantly alter the total mix of information available to WashingtonFirst’s stockholders” and could influence their decision to support or oppose the merger.

According to the complaint, the defendants’ registration statement fails to disclose details regarding both companies’ financial projections and the valuation analyses performed by WashingtonFirst’s financial advisor – Keefe, Bruyette & Woods, Inc. (KBW).

Furthermore, the plaintiff claims stockholders are entitled to any information regarding potential conflicts of interest among WashingtonFirst directors and KBW that may have swayed them to support the merger, including future employment with the new company and, in KBW’s case, compensation received for past services to the defendants.

The registration statement also neglects to state whether non-disclosure agreements between WashingtonFirst and potential buyers contained provisions that restricted the buyers from proposing superior offers, the lawsuit argues. Without the aforementioned information available to them, the plaintiff says stockholders are unable to determine whether the deal is fair to them.