A lawsuit has been filed over Key Bank's potential take over of First Niagara Bank.
Faruqi & Faruqi, a law firm based in New York City, has filed a class action lawsuit claiming that the merger agreement doesn't adequately compensate shareholders.
The deal, valued at $4.1 billion dollars, was announced on October 31st, 2015. According to the agreement, shareholders will receive $2.30 in cash, and 0.68 shares of KeyCorp common stock -- a value of $11.40 per share, more than a dollar above the $10.38 per share closing price of First Niagara Stock on October 30th.
The lawsuit alleges that the deal fails to value the company's recent financial performance, and is well below analyst estimates.
This isn't the first concern raised about the deal. U.S. Senator Chuck Schumer says he's worried about potential job cuts, and spoke to the CEO of KeyCorp in December urging the company to protect New York jobs. Later in the month, the company pledged to keep First Niagara's mortgage operations in Buffalo, and add 300 jobs to expand operations.
First Niagara employs about 2,300 people.
The firm is asking current shareholders to join the suit by March 19, 2016. More information about the lawsuit is available here.
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