RMBI Shareholder Value in the Context of the Proposed Merger with The Farmers Bancorp: Assessing Fairness and Legal Risks

The proposed merger between Richmond Mutual Bancorporation, Inc. (RMBI) and The Farmers Bancorp has sparked significant scrutiny from investors and legal experts. Announced on November 12, 2025, the all-stock transaction values the combined entity at approximately $82 million, with RMBI shareholders set to own 62% of the new company. While the merger promises expanded operations across Indiana and Ohio, questions persist about whether the deal adheres to Delaware's stringent fiduciary standards and whether it fairly compensates shareholders.

Legal Framework and Fiduciary Obligations

Delaware law, which governs many corporate mergers, imposes rigorous obligations on boards to act in shareholders' best interests. Two key precedents-Unocal and Revlon-frame the analysis. The Unocal standard requires directors to respond to takeover threats with proportionality and good faith, while Revlon mandates that boards seek the highest price for shareholders when a company is for sale. In this case, the RMBI merger appears to fall under Revlon principles, as the board is facilitating a sale of Farmers Bancorp to RMBI.

Recent Delaware court rulings, however, highlight the enforceability of contractual terms over implied fiduciary duties. For instance, in Khan v. Warburg Pincus, the court dismissed claims that a private equity firm breached good faith obligations, emphasizing that explicit contractual waivers of fiduciary duties preempt such claims. This suggests that if RMBI's merger agreement includes clear terms waiving certain duties, legal challenges may struggle to gain traction.

Fairness Opinion and Competitive Bidding: Missing Safeguards?

A critical concern for shareholders is whether RMBI's board secured the best possible terms. The absence of a fairness opinion-a third-party assessment of the deal's financial fairness-raises red flags. While fairness opinions are not legally required in short-form mergers (where a parent company controls 90% of shares), they are considered best practice, particularly in transactions involving minority shareholders. The lack of such an opinion in this case could expose the board to claims of negligence.

Similarly, there is no public evidence of a competitive bidding process. Delaware courts have increasingly emphasized the importance of robust processes to ensure fair outcomes. For example, , a lack of board independence and inadequate disclosures led to the invalidation of a stock-option plan. If RMBI's merger lacked competitive bids or independent oversight, it may fail to meet the Revlon standard of securing the highest price for shareholders.

Ongoing Investigations and Shareholder Risks

Investor rights firm Halper Sadeh LLC is already probing the merger, alleging potential breaches of fiduciary duties and inadequate disclosures. The firm argues that the board may have failed to secure optimal consideration for shareholders or to reveal material information about the merger's risks. If the investigation uncovers procedural flaws, shareholders could push for renegotiation or additional disclosures.

The Delaware General Corporation Law (DGCL) provides another layer of complexity. Recent amendments to the DGCL introduced safe harbors for transactions meeting specific criteria, potentially shielding boards from challenges if they follow prescribed procedures. However, these protections are contingent on transparency and adherence to procedural norms-areas where the RMBI merger appears to be under scrutiny.

Conclusion: A Delicate Balance of Risk and Reward

The RMBI merger with Farmers Bancorp presents a strategic opportunity to consolidate regional banking operations, but its success hinges on legal and procedural rigor. Shareholders must weigh the potential benefits of the deal against the risks of inadequate due diligence. Under Delaware law, the board's ability to withstand legal challenges will depend on whether it can demonstrate a fair process and a reasonable valuation.

As the merger awaits regulatory and shareholder approvals, the ongoing investigation by Halper Sadeh LLC underscores the importance of transparency. If the board cannot convincingly defend its actions, the deal could face costly litigation or reputational damage. For now, investors are advised to monitor developments closely and consider the implications of this high-stakes corporate transaction.