According to the law firm press release, pursuant to the terms of the Merger Agreement, which was unanimously approved by the Board, CommunityOne shareholders will either receive (i) $14.25 in cash or (ii) 0.430 shares of Capital Bank Class A common stock. The consideration stipulates that no more than 85% of the outstanding CommunityOne shares will be converted into shares of Capital Bank and no more than 15% of the outstanding CommunityOne shares will be converted into cash. The complaint alleges that the offer is inadequate in light of the Company's fourth quarter and year end 2015 earnings release, released on January 29, 2016, in which it reported a 16% increase in net income from the 2014 fourth quarter results and a whopping 43% increase from the full year results from 2014.
The complaint alleges that the Form S-4 Registration/Joint Proxy Statement ("S-4") filed with the Securities and Exchange Commission ("SEC") on December 21, 2015 provides materially incomplete and misleading information about the Company and the Proposed Transaction, in violation of Sections 14(a) and 20(a) of the Exchange Act. The S-4 fails to provide CommunityOne's shareholders with material information concerning the financial and procedural fairness of the Proposed Transaction.
Furthermore, according to the complaint, the Merger Agreement includes strict "standstill" and "no-shop" provisions, a "no solicitation" provision, and a $14 million termination fee which essentially ensure that a superior bidder will not emerge, as any potential suitor will undoubtedly be deterred from expending the time, cost, and effort of making a superior proposal while knowing that Capital Bank can easily foreclose a competing bid.