An investor in Boston Private Financial Holdings (BPFH) has urged shareholders to reject its proposed merger with SVB Financial Group.
SVB, the parent company of Silicon Valley Bank, announced on January 4, 2021 that it had entered into a definitive merger agreement to acquire BPFH.
HoldCo Asset Management, which owns 4.9% of the shares in BPFH, issued a statement in response to the publication of a “cautionary” report by Institutional Investor Services (ISS) that raised several concerns relating to the transaction process and valuation of the planned deal.
In its statement, HoldCo said: “ISS’s rare ‘cautionary support’ recommendation for the merger gives significant credence to the concerns we have expressed. Further, in its report ISS makes numerous points that would seem to support a vote against the merger.
“We continue to believe that shareholders would be better off under any scenario other than the merger. Shareholders should not vote in favor of a transaction that is the product of a non-existent sales process and highly conflicted negotiations, and that grossly undervalues the company.”
Following the deal, the combined private bank and wealth management assets under management would be $17.7 billion.
HoldCo has said that voting against the merger would allow a “competitive and comprehensive” sales process to take place that would be overseen by a more independent board.
In its report, ISS highlighted the sales process, which “as described in the proxy, leaves the impression that the company was not as responsive to outreach from potential bidders as shareholders may have preferred”. It also questioned the involvement of BPFH CEO Anthony DeChellis.
ISS stated: “The dissident points to DeChellis’ employment agreement with SVB and the significant retention bonuses to other BPFH executives as evidence that BPFH favored SVB as a potential acquiror.
“While the board has stated that negotiations with SVB were led by chairman Waters and independent director Furlong, the presence of DeChellis throughout the negotiations raises doubts that could have been avoided had the board created a committee of disinterested directors to lead negotiations.”
SVB Financial Group had not responded to a request for comment at the time of publication.