The Ademi Firm is investigating HomeStreet (NASDAQ: HMST) for possible breaches of fiduciary duty and other violations of law in its transaction with Mechanics Bank.
The reverse merger transaction values HomeStreet at a pre-transaction estimated equity value of $300 million and Mechanics Bank at a pre-transaction estimated equity value of $3.3 billion. Upon completion of the transaction, existing HomeStreet shareholders are expected to own approximately 8.3% of the combined company, and the remaining ownership of approximately 91.7% will be held by legacy Mechanics Bank shareholders, with Ford Financial Fund and its affiliates owning approximately 74.3% of the combined company..
HomeStreet insiders will receive substantial benefits as part of change of control arrangements.
The transaction agreement unreasonably limits competing transactions for HomeStreet by imposing a significant penalty if HomeStreet accepts a competing bid. We are investigating the conduct of the HomeStreet board of directors, and whether they are fulfilling their fiduciary duties to all shareholders.