On August 22, 2017, a proposed transaction was announced, in which Bear State Financial and Bear State Bank would merge with Arvest Bank and Arvest Acquisition Sub, Inc. On September 25, 2017, a Preliminary Proxy Statement for the transaction was filed with the Securities and Exchange Commission (SEC). However, the complaint for this transaction alleges that the Proxy Statement omits information about the proposed transaction that makes it false and misleading.
The class for this action is public stockholders of Bear State Financial.
According to the complaint for this class action, the proposed transaction would affect the four companies as follows: Arvest Acquisition Sub would merge into Bear State Financial; Bear State Financial would dissolve or merge into Arvest Bank; and Bear State Bank would become a wholly-owned subsidiary of Arvest Bank. If Bear State’s stockholders approved the transaction, they would receive $10.28 cash for each share of Bear State Financial stock that they owned.
What the Proxy Statement leaves out, the complaint alleges, are the full details of the financial projections and valuation analyses performed by Bear State Financial’s financial advisor for the transaction, Raymond James & Associates.
The complaint alleges that stockholders need to know the details of how Raymond James made its projections and arrived at its valuations. It claims that when an advisor declares that a deal is fair, the stockholders must know the methods and figures it used in arriving at that decision. According to the complaint, the omission of this material makes the Proxy Statement false and misleading, specifically in two parts, the “Opinion of Raymond James & Associates, Inc.” and “Certain Unaudited Bear State Forecasts.”
In addition, the complaint claims that the Proxy Statement omits information on potential conflicts of interest for Bear State’s officers, including their potential employment with Arvest after the merger and a “retention cash incentive award” of $86,000 to Bear Bank’s Executive Vice President and Chief Accounting Officer. The complaint claims that these omissions render false and misleading the sections of the Proxy Statement “Background of the Merger” and “Interests of Certain Persons in the Merger.”
Also, the complaint claims that the Proxy Statement omits information on potential conflicts of interest for the financial advisors and material on the background of the proposed transaction, in which Bear State reached out to other financial institutions about acquiring Bear State, rendering false and misleading the Proxy Statement’s “Opinion of Raymond James & Associates” and “Background of the Merger.”
All this, the complaint alleges, violates certain sections of the Securities Exchange Act of 1934.