425: CrossFirst Bankshares and First Busey Corporation Address Lawsuits with Supplemental Merger Disclosures

CrossFirst Bankshares and First Busey Corporation are providing supplemental disclosures to their joint proxy statement/prospectus in response to stockholder lawsuits challenging the proposed merger.

Summary

• CrossFirst Bankshares and First Busey Corporation are proceeding with their planned merger, initially announced on August 26, 2024.
• The merger involves CrossFirst merging into Busey, with Busey as the surviving entity, and subsequently, CrossFirst Bank merging into Busey Bank.
• The SEC declared the registration statement for the merger effective on November 13, 2024, and the joint proxy statement/prospectus was mailed to stockholders around the same date.
• Following the filing of the proxy statement, two lawsuits were filed by purported CrossFirst stockholders, alleging false and misleading statements and breaches of fiduciary duty.
• Additionally, demand letters were received from other purported stockholders making similar allegations.
• To avoid potential delays and costs associated with litigation, CrossFirst and Busey are providing supplemental disclosures to the joint proxy statement/prospectus, while denying any wrongdoing or legal necessity for the additional information.
• The supplemental disclosures include additional details regarding the background of the merger, the financial advisor's opinion, and the financial analysis of the transaction.
• The merger is expected to be accretive to Busey's 2026 EPS by 16.2% but could be dilutive to Busey's tangible book value per share by 0.6% at closing, assumed as of March 31, 2025.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly negative due to the legal challenges and the potential for dilution, but the merger is still progressing as planned. The supplemental disclosures are a positive step towards transparency.

Positives

• The merger is still on track despite legal challenges.
• The supplemental disclosures aim to provide transparency and address stockholder concerns.
• The merger is expected to be accretive to Busey's earnings per share in 2026.

Negatives

• Two lawsuits and demand letters have been filed by purported stockholders, alleging misleading statements and breaches of fiduciary duty.
• The merger could result in a slight dilution to Busey's tangible book value per share at closing.

Risks

• The outcome of the legal proceedings could potentially delay or derail the merger.
• The merger may not close if required approvals are not received or conditions are not met.
• The integration of the two companies may be more difficult, time-consuming, or costly than expected.
• The anticipated benefits of the merger may not be fully realized.
• There are risks related to changes in interest rates, economic conditions, and regulatory environments.
• The companies face risks related to cybersecurity, technology, and the loss of key personnel.

Future Outlook

The document includes forward-looking statements regarding the expected timing of the merger, cost savings, synergies, and other anticipated benefits, but cautions that actual results could differ materially due to various risks and uncertainties.

Management Comments

• CrossFirst and Busey believe that the claims asserted in the Matters are without merit and supplemental disclosures are not required or necessary under applicable laws.
• CrossFirst, the other named defendants and Busey deny that they have violated any laws or breached any fiduciary duties.
• Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth herein or in the joint proxy statement/prospectus.

Industry Context

This merger is part of a broader trend of consolidation in the banking industry, where companies seek to achieve economies of scale and expand their market presence. The legal challenges highlight the scrutiny that such transactions face from shareholders.

Comparison to Industry Standards

• The document provides detailed comparable company and transaction analysis, including stock price-to-tangible book value multiples, price-to-earnings multiples, and transaction premiums.
• The low and high multiples for the selected companies and transactions are provided, allowing for a comparison of the merger terms to industry benchmarks.
• The analysis includes both selected company analysis and selected transaction analysis, providing a comprehensive view of the market.
• The document references the use of dividend discount models with discount rates of 11.0% to 13.0%, which are typical for financial institutions.

Legal Proceedings

• Two lawsuits have been filed by purported stockholders against CrossFirst, its board members, and Busey.
• Demand letters have been received from other purported stockholders making similar allegations.
• The lawsuits and demand letters allege false and misleading statements in the registration statement and breaches of fiduciary duty.

Stakeholder Impact

• Shareholders of both CrossFirst and Busey are impacted by the merger and the associated legal challenges.
• Employees of both companies may be affected by the integration process.
• Customers of both banks may experience changes as a result of the merger.

Next Steps

• The companies will continue to seek regulatory and stockholder approvals for the merger.
• The companies will continue to defend against the lawsuits and demand letters.
• The companies will work towards the integration of the two businesses following the merger.

Key Dates

Keywords

merger, acquisition, lawsuit, proxy statement, CrossFirst Bankshares, First Busey Corporation, financial advisor, stockholders, EPS, tangible book value, litigation, disclosure