Tuesday, Oct. 9, 2012 | 2:51 p.m.
The parent companies of two Nevada banks have settled a class-action lawsuit by an investor who claimed their proposed merger was at a low-ball price.
Bank of Nevada’s parent, Western Alliance Bancorp., said Tuesday that it and Service1st Bank of Nevada’s parent, Western Liberty Bancorp, settled David Raul’s lawsuit. The Western Liberty shareholder sued the companies and Western Liberty’s board of directors last month in Clark County District Court.
He sought to quash their merger, alleging Western Liberty’s board breached its fiduciary duties by agreeing to sell the company to Western Alliance for “grossly inadequate consideration.” The deal has been valued at $55 million.
The companies believe the lawsuit is “without merit.” But to avoid the “costs, risks and uncertainties” that come with litigation, they reached a memorandum of understanding with Raul to settle the case, Western Alliance said.
The settlement is subject to court approval.
Phoenix-based Western Alliance announced Aug. 17 it signed a definitive agreement to buy Western Liberty. The deal is expected to close this fall, and at that point, Service1st will merge into Bank of Nevada.
Under the terms of the deal, Western Liberty shareholders can choose to receive either $4.02 in cash or 43 percent of a share of Western Alliance for each share they owned in Western Liberty.