A 'Sad Day' at Sovereign
The odds might have just turned prohibitive for dissidents trying to force management change at Sovereign Bancorp (SOV).
The bank, which last night agreed to modifications of its $2.4 billion equity sale to Spain's Banco Santander, now has the blessing of the New York Stock Exchange for a transaction that also includes the acquisition of Independence Community Bank (ICBC).
In stripping out some of the deal's most odious provisions, Sovereign not only kept the Big Board's regulators from interfering, it made it more difficult for angry shareholders to force out top brass.
Legal experts say the NYSE did Sovereign a favor in recommending that the bank amend the Santander transaction. Parts of it had previously read like long-term employment contracts for Sovereign's CEO Jay Sidhu and the bank's directors.The revised terms probably put enough polish on the deal to enable it to pass muster with any court or other regulatory agency. Donald Langevoort, a securities law professor at Georgetown University, says that given the deference courts usually show to privately negotiated transactions, it's unlikely the deal will be blocked. It now seems there's little to stop Sovereign from going forward with its controversial sale of a 19.8% equity stake to Santander without holding a shareholder vote. That also means a green light for the Philadelphia-based bank's simultaneously announced a deal to buy Independence. Wall Street traders on Wednesday certainly responded as if the dual-transactions were a done deal. Shares of Sovereign at midday trading were down 72 cents, or 3.2%, to $21.94. The bank's stock is almost back to the price at which it closed on Oct. 25, one day after the deal was announced but before the dissident campaign began gathering steam. Independence's stock, which had been sliding the past few weeks in the face of mounting opposition from Sovereign shareholders, was trading sharply higher on the news of the NYSE's approval. In midday trading, the thrift's stock rose $1.77, or 4.6%, to $39.84. That's a few dollars below the proposed $42-a-share purchase price.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV