Nov. 8 (Bloomberg) -- Wilmington Trust Corp., the century-old bank founded by a member of the du Pont family, was sued by a stockholder who claims directors violated their duties by agreeing to sell the firm to M&T Bank Corp. at too low a price.
The investor asked a judge to block the $351 million takeover until Wilmington Trust implements a procedure to get the best price possible for its shares, according to a Nov. 5 complaint filed 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 Nov. 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 percent less than the previous closing price. The shares fell 41 percent to $4.21 that day.
The fact that Wilmington Trust received below-market price doesn’t mean the lawsuit will necessarily advance in the courts, said Charles Elson, chairman of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
“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 in a phone interview.
The case was assigned to Judge J. Travis Laster.
“There is no comment we wish to make,” Bill Benintende, a Wilmington Trust spokesman, said in an e-mailed message.
M&T has $68.2 billion in assets and Wilmington Trust has $10.4 billion, the companies said in a statement announcing the acquisition.
Wilmington Trust’s Chief Executive Officer Donald E. Foley 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 or 1.86 percent to $4.23 in New York Stock Exchange composite trading at 4:02 p.m. On April 22, the shares reached a 52-week high of $20.23. M&T fell 48 cents to $82.22.
The case is Yi v. Wilmington Trust, CA5959, Delaware Chancery Court (Wilmington).
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