A securities class action was recently against ESB Financial, Inc., in connection with the company's proposed sale to WesBanco, Inc.
ESB Financial, Inc. serves as a thrift holding company for ESB Bank, offering various both commercial and retail products and services to customers in Western Pennysylvania through the bank. Through this setup, the thrift holding company is able to offer checking, savings and money market accounts, time deposits and certificate accounts.
In addition to owning this bank, ESBF is the parent company of ESB Capital Trust IV, a business trust created to help facilitate the sale of trust preferred securities to the broader investing public. Finally, ESBF operates a subsidiary named AMSCO, Inc., which is involved with real estate development.
Securities class action basics
On Dec. 16, 2014, the Law office of Brodsky & Smith, LLC announced it had launched a shareholder class action on the previous day, representing all individuals or organizations that owned ESBF's common shares, in relation to the company's proposed acquisition by WesBanco, Inc.
The lawsuit, which was filed in the United States District Court for the Western District of Pennsylvania, claimed that in an attempt to consummate the proposed acquisition – for an unfair price and using an unfair process – ESBF, its board and WesBanco breached their duties, and or helped others engage in such violations.
The securities class action also alleged that ESBF and its board breached both §14(a) of the 1934 Act and Rule 14a-9 when they provided a Registration Statement on Form S-4 that was false and misleading.
Merger agreement
On Oct. 29, 2014, ESBF and WesBanco entered into a definitive agreement, which involved the latter company buying all of the former firm's outstanding shares, according to the lawsuit. The proposed transaction had a value of roughly $324 million, according to Pittsburgh Business Times. On Nov. 20, 2014, defendants caused Form S-4 to be filed with the SEC and circulated in relation to the shareholder vote on the proposed acquisition scheduled for Jan. 22, 2014.
Lawsuit allegations
The securities class action claimed that the S-4, which shareholders utilized when determining how they would vote on the proposed deal, included multiple false and misleading statements that were important to investors' decision to vote either for or against the approval of the transaction.
In addition, the suit alleged the document left out several key facts whose inclusion would be needed for its content to not be false and misleading, including the analysis conducted by the board's financial advisor, the circumstances that contributed to the merger agreement and ESBF's prospective financial information.
By filing the legal claim, the law firm was looking to benefit company shareholders by bringing them injunctive and equitable relief.
Information for eligible investors
Brodsky & Smith informed investors that if they want to learn more about this particular lawsuit, or have any specific questions regarding their rights or interests in the case, they can feel free to contact either Jason Brodsky or Evan Smith. The law firm also notified interested investors that if they want to serve as lead plaintiff, they have until no later than 50 days after the lawsuit's announcement to move the court. Finally, Brodsky & Smith told investors that they have the ability to do nothing and remain an absent member in the securities class action, or alternatively be a lead plaintiff through legal representation of their choosing.