Some former officials of a Maryland bank and one it bought have tentatively agreed to stop fighting it and sell their shares.
The group had been trying to force $840 million-asset Mason-Dixon Bancshares to put itself up for sale. Under the tentative agreement, Mason- Dixon and the group would drop lawsuits against each other and the group would leave the bank alone for at least three years.
The settlement, which received preliminary approval Friday from a U.S. District Court judge in Baltimore, is expected to be finalized June 23.
It calls on Mason-Dixon to buy the group's 268,671 shares at $21.625 per share - just slightly more than last Friday's close of $21.25 - for a total of about $5.8 million. The stock was trading at $21.25 at midday Tuesday.
The agreement includes a pledge that for three years neither the group's members nor Mason-Dixon or its management and directors disparage each other.
In their lawsuits, both sides had accused each other of making false and defamatory statements.
Mason-Dixon sued the shareholder group Dec. 9 charging that it violated federal proxy solicitation laws, federal securities disclosure laws, and state bank acquisition laws. The group was founded by Barbara S. Floyd, the former chief financial officer of Mason-Dixon's main subsidiary, Carroll County Bank and Trust Co. Mason-Dixon said Mr. Floyd was retaliating for having been passed over for promotion.
The dissidents countersued in March, alleging that Mason-Dixon executives violated their duty to shareholders by not considering possible mergers or acquisitions.
Mason-Dixon's management has said it wants the bank to remain independent. Mason-Dixon remains one of the few independent banks of significant size in Maryland, and observers say it's definitely an acquisition target.
Jon D. Holtaway, vice president of Danielson Associates Inc., a Rockville, Md. bank consulting firm, said he thinks several Pennsylvania regional banks are interested, including Lititz-based Susquehanna Bancshares and Keystone Financial Corp., Harrisburg.
But he said Mason-Dixon is safe-for now-from shareholder activism. He said the dissident shareholders never proved why the bank should be sold.
"It appears a total victory for the management group," Mr. Holtaway said. "They didn't have to pay a premium to get rid of these people."
