Provident New York Bancorp (PBNY) and Sterling Bancorp (STL) have reached a settlement with shareholders who alleged that Sterling's board violated its fiduciary duty and failed to disclose crucial information about the two companies' pending merger.
The companies agreed to a settlement with the shareholders on Sept. 12, and disclosed further information about the merger in a regulatory filing on Friday. The financial terms of the settlement, if any, were not disclosed.
In April, the Montebello, N.Y.-based Provident agreed to pay $344 million in stock for Sterling, which is based in New York City. Following the announcement of the merger agreement, eight shareholder lawsuits were filed in New York seeking to prevent the merger and asking for damages if the merger is allowed to proceed. The suits claimed that Sterling's board violated its fiduciary duties and federal law by failing to disclose material information to the shareholders, and that Provident aided and abetted Sterling in these violations.
Some analysts have been skeptical about the financial advantages the two companies predict from the merger, which include a projected return on equity of more than 12%.
The settlement, which must receive court approval, would dismiss these suits. The shareholder vote on the merger is scheduled for Sept. 26.
Although the two companies believe that their previous disclosure was adequate, they settled the matter and agreed to further disclosure in order to avoid delaying the merger and to minimize the expense of fighting the suits, the regulatory filing says.
The supplemental disclosure the companies made Friday largely concerns the merger negotiations and the business projections that the companies received from Keefe, Bruyette & Woods.