Colonial Properties shareholders left holding an empty bag after merger

Mid- America Apartment Communities is in the process of working a merger with Colonial Properties Trust, a publicly held Birmingham company. Colonial CEO Lowder has stated that the merger has been contemplated for years. Troubling however is that the deal provides that the Memphis-based company will collect 56% of the merger profits from its takeover of Colonial and further reserves a seat for Lowder on MMA’s board of directors. Moreover, after posting a $5.6 million earning and 16% percent stock value increase in the first quarter, Colonial stock somehow continued to decline in value with the merger on the horizon. Instead of having to purchase a control premium at great profit to Colonial shareholders, MMA has managed to swim upstream against the market with Birmingham investors stranded onboard. The redeeming quality of the up-and-coming deal is that Colonial shareholders are being promised a dividend increase for their newly created shares. Yet, with no guarantee of profit, bewildered Colonial shareholders might not buy into the promise of future earnings and might instead file suit, likely with grounds for direct and derivative avenues for investigation.