WASHINGTON — Hibernia Corp. recently signed a memorandum of understanding regarding a settlement with Hibernia shareholders that concerns a lawsuit filed in connection with the company's proposed merger with Capital One Financial Corp.
On April 22, a putative class-action complaint was filed on behalf of the shareholders of Hibernia against the company and each of the members of Hibernia's board in connection with the proposed merger.
The complaint alleged the directors of Hibernia breached their fiduciary duties by failing to maximize shareholder value and by creating deterrents to third-party offers.
According to a filing Thursday with the Securities and Exchange Commission, the memorandum of understanding states the parties will form a settlement agreement. This deal encompasses an agreement by Capital One to waive the right to receive $20 million of the $220 million termination fee payable by Hibernia under certain circumstances, as well as a complete settlement and release of all claims of the plaintiffs and the putative plaintiff class against Hibernia, Capital One, and their respective related parties and representatives.
The memorandum of understanding also contemplates the payment of legal fees to plaintiff's counsel, the filing said.
The settlement contemplated by the memorandum of understanding is subject to the execution by the parties of a definitive settlement agreement and the approval of that agreement by the court, the filing said.
In March, credit-card issuer Capital One reached an agreement on a plan to buy Hibernia in a deal valued at about $5.3 billion at that time. The merger is expected to close in the third quarter of this year.
