Metro Bancorp, a company under fire from activist investors, has adopted a shareholder rights agreement.
The $3 billion-asset, Harrisburg, Pa., company said in a press release Tuesday that the one-year agreement will provide common stock shareholders a dividend of one right per share. If Metro sells itself, as some outsiders have pressured it to do, shareholders would be eligible to buy fractions of participating preferred stock and have voting rights similar to that of holding one common share at an exercise price of $100 per right.
Shareholder rights plans are often designed to ward off hostile advances.
Metro's rights will trigger if an entity buys or tenders an offer to buy at least 15% of the company's common stock. If an entity buys more than half of Metro's common stock, then the rights will be rendered moot.
PL Capital, an investment firm that holds close to 9% of Metro's stock, is waging a proxy battle to put its nominees on the company's board. PL Capital, along with Basswood Management and Clover Partners, have urged Metro to sell itself in recent months.
Further complicating matters, Gary Nalbandian, Metro's chairman, president, and chief executive, sent employees a letter earlier this month disclosing that he will undergo coronary bypass surgery next month due to a blockage he says was discovered during a routine checkup. He said an expected medical leave will last until the third quarter.
"The rights agreement is intended to protect the interests of all of our shareholders and enable the board to remain in the best position to perform its fiduciary duties," Nalbandian said in Tuesday's press release. "The issuance of the rights has no dilutive effect, will not affect reported earnings per share, is not taxable to Metro Bancorp or its shareholders and will not change the way in which Metro shares are traded."
Shareholders will be notified by letter of the rights agreement. Metro's annual meeting typically takes place in May.