This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BEN $37.74 1.07%
AAPL $93.64 -0.11%
FB $118.57 0.84%
GOOG $698.21 0.75%
TSLA $241.80 0.43%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs