The board of directors of Boston Private Financial Holdings, the parent company of the bank and trust company Boston Private, sent a letter to shareholders to support the proposed $ 900 million sale of the company to Silicon Valley Bank as a “reckless gamble “.
In January, HoldCo Asset Management, a New York-based mutual fund that owns 4.9% of Boston Private’s shares, sent a damning letter to Anthony DeChellis, CEO of Boston Private Bank & Trust, and Steve Waters, chairman, in which he executives accused of failing to find a suitable buyer through a competitive bidding process and undervaluing the company’s traditional banking operations in pursuit of a sale that would encourage a pie-in-the-sky asset management strategy.
Now the directors of Boston Private have shot back.
HoldCo’s “dice throw” attempt to take control of the Boston Private Board and find alternatives to selling “ignores the substantial risks” and rests on the “unfounded hope that a previously unknown acquirer will suddenly step in for more value.” deliver”. the board of directors, led by Waters of Compass Partners Capital LLC, a Stamford, Connecticut-based private investment firm, said in its letter to shareholders.
HoldCo Asset Management could not be reached for comment and Boston Private declined further comment.
Silicon Valley’s $ 14.67 offer was a 74% premium over Boston Private’s stock price of $ 8.45 in late December, directors said.
HoldCo’s “poor” analysis of Boston Private’s value “ignores the fundamentally different financial, growth, and valuation profiles” of banks. HoldCo’s analysis gives Boston Private a rating 2.8 times its share price at the time of the announced merger. “Not a single major bank merger in the past 10 years has included a premium at this level– Emphasize how unusual the analysis by HoldCo is, ”said the letter to shareholders.
Boston Private directors said HoldCo executives demonstrated “inexperience” in banking when activist investors were forced to withdraw candidates to Boston Private’s board of directors because they were engaged in a “parallel looming proxy battle” with the parent company at Berkshire Bank. The hedge fund was apparently unaware of longstanding banking laws banning such proposed lockdowns by directors, the directors wrote.
“HoldCo is an activist hedge fund with no prior experience running a company, let alone a bank, and no apparent familiarity with the regulatory system under which Boston Private operates,” wrote the directors.
HoldCo’s allegation that Boston Private executives wrongly benefited from the deal is also false, the letter said.
The SVB-packaged compensation for CEO Anthony DeChellis was worked out after the contract was negotiated, and DeChellis waived dismissal protection when it came to converting his Boston private equity into SVB equity and rewards. Other Boston Private executives do not receive retention awards unless they stay with SVB for four years.
Around the same time HoldCo released the letter, at least four law firms publicly announced that they were also investigating the sale on behalf of potential shareholder disputes.
Since the announcement of the impending sale, an advisory team has announced the resignation of Boston Private for a Los Angeles-based RIA called Lido Advisors. Advisors to Jeffrey Kaufman and John Tassone The Boca Raton, Florida-based companies left Boston Private in March.
Boston Private shareholders will vote on the proposed combination at a special meeting on April 27th.