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Another suit filed over Key-First Niagara deal

Another class-action lawsuit has been filed challenging KeyCorp’s proposed deal for First Niagara Financial Group.

New York City-based Faruqi & Faruqi contends the $4.1 billion deal – which amounts to $11.40 per share – “fails to adequately value (First Niagara’s) recent financial performance, is well below analyst estimates, and fails to adequately compensate shareholders for the synergies that KeyCorp will enjoy from the transaction.”

The suit also claims the $137.5 million breakup fee First Niagara would have to pay to KeyCorp if the deal fails, along with other provisions, “essentially ensure that a superior bidder will not emerge, as any potential suitor will undoubtedly be deterred from expending the time, cost, and effort of making a superior proposal.”

Beth E. Mooney, KeyCorp’s chairman and CEO, has previously said she feels such suits are without merit and will not derail the merger.