BancTrust, Trustmark merger under review


The $55.4 million merger agreement between Jackson, Mississippi-based Trustmark Corp. and BancTrust Financial Group Inc. is being reviewed to determine whether BancTrust shareholders are receiving adequate compensation for their shares.

Former U.S. Securities and Exchange Commission attorney Willie Briscoe and the securities litigation firm of Powers Taylor LLP are investigating the sale for BancTrust shareholders.

Under the terms of the merger, BancTrust shareholders will receive .125 shares of Trustmark common stock for each share of BancTrust common stock, which is valued at about $3.08 per share.

At least one analyst with Yahoo! Finance has estimated that the true value of the stock is as high as $6.00 per share.

Briscoe said the investigation centers on whether BancTrust shareholders are getting sufficient compensation for their shares in the buyout, whether the deal undervalues BancTrust stock, and whether BancTrust’s board tried to get the highest share price for all shareholders before agreeing to the deal.

“Because of the lack of a significant premium to the shareholders, and other factors, we believe that the transaction may undervalue BancTrust stock,” Briscoe said in a statement. “Our lawsuit will seek to obtain the highest share price for all shareholders.”

Trustmark on Tuesday agreed to acquire BancTrust in a deal that gives Trustmark a presence in the Alabama market. Under the deal, expected to close in the fourth quarter, Trustmark also agreed to repay $50 million that BancTrust received under the U.S. Treasury’s Troubled Asset Relief Program.

The investigation comes as Fitch Ratings dropped Trustmark’s investment-grade ratings from stable to negative, stating concerns about the lender’s pending acquisition of BancTrust, Reuters reported.

Fitch said Thursday it viewed the deal’s pricing as aggressive in terms of acquired book value and expensive given BancTrust’s weakened financial condition, according to Reuters.

Shares of Trustmark and BancTrust closed Thursday at $24.42 and $2.94, respectively.

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