Settlement talks between First United, Driver Management break down

BOSTON (Reuters) – Talks between First United Corp and Driver Management to settle a fight for board seats at the bank holding company broke down when the activist investor rejected the offer, two sources familiar with the matter said on Thursday.

“Your ‘best and final’ offer failed to meet what I clearly described as the minimum acceptable conditions for any cooperation agreement,” Driver Management founder Abbott Cooper wrote in a letter to the board’s lead director and seen by Reuters. “I think it is appropriate to suspend those discussions.”

They two sides now appear headed for a showdown at a time a number of companies have pushed to settle with activists amid the panic selling that battered their stock prices as the coronavirus has spread.

First United, the holding company for Maryland community bank First United Bank & Trust, said it was offering Driver a say in picking more than a quarter of its 11-member board, including two independent directors who would be appointed before this year’s annual meeting.

Driver, which owns roughly 5% of the company, would pick one director from the company’s nominees and the company would pick one of Driver’s proposed candidates, according to First United’s proposal.

A third independent director would be named before next year’s meeting. Each of the new directors designated by Driver would be given a committee assignment.

Driver has for months been pushing the company to sell itself, saying it has fallen behind peers in making new loans. In September, Driver forecast the company could be sold for between $26 and $33 a share. It traded at $12.88 on Thursday.

Driver this week criticized the company for missteps during the 2008 financial crisis and said it was poorly positioned for the current downturn. Cooper, Driver’s founder, said he wants two people to hold the positions of chief executive and board chairman, both currently held by CEO Carissa Rodeheaver.

And he said he would like a full board refreshment to eliminate directors who have served more than 10 years.

Driver nominated three directors last year.

Since September the fight has heated up with barbs often directed at the board and Rodeheaver, lawyers and bankers said.

Cooper previously wrote to the lead independent director that they could speak by phone. But “spare me the false indignation and just get to business,” Cooper’s letter said.