(Bloomberg News) Wilmington Trust Corp., the century-old bank founded by a member of the du Pont family, was sued by a stockholder claiming directors violated their duties by agreeing to sell the firm to M&T Bank Corp. at a cut-rate price.
The investor asked a judge to block the $351 million takeover until Wilmington Trust implements a procedure to get the best possible price for its shares, in a November 5 complaint in Delaware Chancery Court in Wilmington.
"The proposed transaction is the product of a flawed process" and "has been engineered to take advantage of the recent decline in the trading price of Wilmington Trust shares," investor Daniel Yi said in the complaint.
Wilmington Trust, based in Wilmington, said November 1 it would exchange each of its shares for 0.051 share of Buffalo, New York-based M&T, a deal that valued the company at 46% less than the previous closing price. The shares fell 41% to $4.21 that day.
"Given the fact they received below market price doesn't mean this thing is going anywhere" in the courts, said Charles Elson, chairman of the John L. Weinberg Center for Corporate Governance at the University of Delaware, in a phone interview today.
"But since it's local, in an area with which the judges have great familiarity, perhaps it will garner more attention" during litigation, Elson said.Judge Assigned
The case was assigned to Judge J. Travis Laster, according to court electronic records.
"There is no comment we wish to make," said Bill Benintende, a Wilmington Trust spokesman, in an e-mailed message today.
M&T has $68.2 billion in assets and Wilmington Trust has $10.4 billion, the companies said in a statement announcing the acquisition.
Donald E. Foley, Wilmington Trust's chief executive officer, said in the statement that officials "continue to face difficult financial realities associated with the credit quality of the loan portfolio in our banking business," and the M&T agreement was "the best available option" after "discussions with several potential partners."
Wilmington Trust fell 8 cents to $4.23 in New York Stock Exchange composite trading at 10:31 a.m. On April 22, the shares reached a 52-week high of $20.23. M&T fell 30 cents to $82.40.
The case is Yi v. Wilmington Trust, CA5959, Delaware Chancery Court (Wilmington, Del.).