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Acquisition Of VantageSouth Bancshares, Inc. By Yadkin Financial Corporation May Not Be In Shareholders' Best Interests

Stocks in this article: VSB YDKN

SAN DIEGO and RALEIGH, N.C., Jan. 29, 2014 /PRNewswire/ -- Shareholder rights attorneys at Robbins Arroyo LLP are investigating the acquisition of VantageSouth Bancshares, Inc. (NYSE-MKT: VSB) by Yadkin Financial Corporation (NASDAQ: YDKN).  On January 27, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which VantageSouth shareholders will receive 0.3125 shares of Yadkin Financial Corporation common stock for each share of VantageSouth common stock, for a total consideration of $5.41 based on the closing price of Yadkin Financial stock on January 24, 2014.


Is the Proposed Merger Best for VantageSouth and Its Shareholders?

Robbins Arroyo LLP's investigation focuses on whether the board of directors at VantageSouth is undertaking a fair process to obtain maximum value and adequately compensate VantageSouth shareholders in the merger.

As an initial matter, the $5.41 merger consideration is significantly below the target price of $6.50 set by an analyst at Raymond James on September 23, 2013.  In addition, VantageSouth traded above the offer prices as recently as October 8, 2013, reaching a high of $5.45.  It should also be noted that the premium to shareholders of 5.2% is substantially below the average one day premium of nearly 30% for comparable transactions in the last three years. 

On October 30, 2013, VantageSouth released its earnings for the quarter ended September 30, 2013, which showed improvements in net income and net operating earnings over the same period 2012. For the quarter, VantageSouth reported an increase in net income to $1.5 million compared to $1.3 million for the same quarter 2012, and net operating earnings of $3.0 million compared to $1.4 million for the third quarter 2012. 

In announcing these results, VantageSouth's Chief Executive Officer, Scott Custer, remarked, "We improved operating earnings and achieved annualized net loan growth of 9 percent in the third quarter despite a general environment of economic uncertainty and slowing mortgage activity… Overall, we are pleased with the progress we made on a number of fronts this quarter and believe that we have properly realigned our mortgage business to operate more profitably in the coming quarters."

Given these facts, Robbins Arroyo LLP is examining the VantageSouth board of directors' decision to sell the company to Yadkin Financial now rather than allow shareholders to continue to participate in the company's continued success and future growth prospects. 

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