Settlement talks between First United, Driver Management break down-sources

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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.

First United, the holding company for Maryland community bank First United Bank & Trust, 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, the sources said.

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, the sources said.

First United declined to comment. A representative for Driver was not immediately available to comment.

Driver nominated three directors to First United’s board in November.

It has for months been pushing the company to sell itself, saying it has fallen behind peers in making new loans. In September, Driver forecast that the company could be sold for between $26 and $33 a share. It closed Wednesday trading at $12.88, having been pushed lower by panic selling sparked by fear over the spreading coronavirus.

Driver rejected First United’s offer and has said it plans to run a proxy fight every year for the next three proxy seasons until it has complete control over the board, the sources said.

Since September the fight has turned unusually personal, with barbs often directed at the board and CEO Carissa Rodeheaver, lawyers and bankers said.

Last month Abbott Cooper, Driver’s founder, wrote to the lead independent director that the board member could telephone the investor. But “spare me the false indignation and just get to business. You can start by explaining why the Board will not do what is right by shareholders and at least test the market for a sale,” Cooper’s letter said.