Sovereign Settles Suit With Investor: San Diego-Based Relational Investors, Which Owns More Than 8 Percent of Sovereign Bancorp Inc. Stock, Has One of Its Principals Elected to the Thrift's Board.
Posted on: Thursday, 23 March 2006, 09:00 CST
By Reading Eagle, Pa.
Mar. 23--Sovereign Bancorp Inc. said Wednesday night that it reached a settlement with its largest shareholder to end a lengthy and contentious legal battle. Under the settlement, Wyomissing-based Sovereign agreed to drop all pending legal action against Relational Investors and elected Relational's principal, Ralph V. Whitworth, to Sovereign's board. Sovereign, the nation's third-largest thrift, also will appoint a second new director from candidates provided by Relational. That director cannot have any previous involvement with either company, according to the settlement. The San Diego-based Relational, an investment advisory firm, owns more than 8 percent of Sovereign stock. "We are delighted to have these disputes resolved and put behind us," said Jay S. Sidhu, Sovereign chairman, president and chief executive officer. Other Sovereign officials declined further comment.
Whitworth has said Relational's goal was to win two seats on Sovereign's board. "I am pleased to achieve our original objective of obtaining board representation, and I look forward to working constructively with the board and Sovereign's management team to build share value for the future," Whitworth said in a prepared statement. Sovereign and Relational have been battling since October, when Sovereign announced a deal to sell a 19.8 percent stake to Spain's Banco Santander Central Hispano SA for $2.4 billion, and then acquire Brooklyn, N.Y.-based Independence Community Bank Corp. for $3.6 billion in cash. Santander would have an option to buy Sovereign outright in 2008. Relational then sued to block the deals with Santander and Independence. Relational dropped the suit last month. In the settlement, Relational agreed to withdraw all regulatory objections to the deals with Santander and Independence. Relational also will not take any action to prevent or delay either transaction, which should close within a few months, according to Sovereign officials. Whitworth will be renominated at Sovereign's annual shareholders meeting for a term to expire in 2009, officials said. It was not clear Wednesday night if a date had been set for the shareholders meeting.
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Copyright (c) 2006, Reading Eagle, Pa.
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Source: Reading Eagle
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