Lawsuits seeking to block the sale of Suffolk Bancorp to People’s United have effectively been settled by the parties, clearing the way for an Oct. 13 shareholders’ vote on the proposed merger.
Suffolk Bancorp this week entered into a memorandum of understanding with the plaintiffs in three lawsuits regarding settlement of the litigation now pending in state and federal courts, the company reported in a filing made Wednesday with the federal Securities and Exchange Commission.
The memorandum of understanding contemplates a stipulation of settlement, though the stipulation has not yet been signed and would be subject to court approval, according to the filed report.
If the court approves the settlement contemplated by the memorandum, the lawsuits will be dismissed with prejudice, according to the agreement.
The plaintiffs complained that Suffolk’s board of directors breached its fiduciary duty to shareholders by failing to adequately investigate alternatives to People’s United and by placing the interests of certain board members and high-placed bank officials ahead of its shareholders. Bluver, who has served as Suffolk’s president and CEO since January 2012 — and is credited with turning around a struggling institution whose stock value had plummeted and had been threatened with delisting by the stock exchange for failure to meet SEC filing requirements — will become People’s New York market president after the merger.
Suffolk Bancorp agreed to provide additional information to shareholders in connection with the proposed merger. See merger agreement. The supplemental disclosures amend the bank’s definitive proxy statement filed with the SEC on Aug. 29 and relate to how the bank chose its financial advisor in the sale, Keefe, Bruyette & Woods Inc. and how that firm calculated the value of the company. See Suffolk’s filed report regarding the details of the memorandum of understanding.
Suffolk also agreed in the memorandum of understanding to pay plaintiff’s legal fees of up to $300,000 if the stipulation of settlement is approved by the court.
“Additional information concerning the proposed settlement will be provided to Suffolk’s shareholders in due course,” the report filed Wednesday said.
Settlement of the actions means the vote can go forward as planned at a special shareholders meeting on Oct. 13 at Suffolk Bancorp’s Riverhead headquarters. The holders of at least 70 percent of the outstanding shares of common stock must approve the merger agreement in order for the deal to move forward. The meeting will be held at The Suffolk County National Bank’s administrative center at 4 West Second Street in Riverhead,at 10 a.m.
Leading proxy advisory firms give thumbs-up to deal
Late yesterday afternoon, Suffolk Bancorp announced that the three leading proxy advisory firms, Institutional Shareholder Services Inc., Glass, Lewis & Co. and Egan-Jones Proxy Services have each “independently recommended that Suffolk shareholders vote for the adoption of the agreement and plan of merger between Suffolk and People’s United Financial, Inc.
“In reaching their recommendations that Suffolk shareholders vote FOR the adoption of the merger agreement, each of ISS, Glass Lewis and Egan-Jones thoroughly analyzed the transaction along with the merits and risks of other alternatives that may be available to Suffolk shareholders,” Suffolk Bancorp said in a press release.
“We are pleased that ISS, Glass Lewis and Egan-Jones have each recognized the strategic logic of our proposed transaction and the value it offers to Suffolk shareholders,” Suffolk president and chief executive officer Howard Bluver said. “We hope to receive our shareholders’ support for the merger at our special meeting of shareholders on October 13, 2016.”
Institutional Shareholder Services said: “The transaction warrants shareholder support given the substantial premium to the unaffected share price, robust auction process, the strategic rationale, and the downside risk of non-approval.”
Glass Lewis said: “Strategically, the proposed transaction will create a larger and more diversified financial institution with broader geographic coverage and opportunities to achieve cost synergies…[W]e believe the proposed transaction is in the best interests of shareholders.”
“After careful consideration, we believe that approval of the merger agreement is in the best interests of the Company and its shareholders and its advantages and opportunities outweigh the risks associated to the transaction,” Egan-Jones said.
Under the terms of the merger agreement, Suffolk shareholders will receive 2.225 shares of People’s United common stock for each share of Suffolk common stock. The receipt of People’s United common stock by Suffolk shareholders is expected to be tax-free, according to the Suffolk Bancorp.
If the merger agreement is approved by shareholders, the transaction is expected to close late in the fourth quarter this year.
