Bloomberg, Sophia Pearson, 19 July 2007
TD Banknorth Inc.'s $4 million settlement of a shareholder suit over a buyout by its parent, Toronto-Dominion Bank, was thrown out by a judge who said the amount should be higher.
The accord is ``insufficient,'' Judge Stephen Lamb wrote in a decision issued today in Delaware Chancery Court in Wilmington. Six investors sued after TD Banknorth said in November that Toronto-Dominion would buy the 41 percent of TD it didn't own for $3.2 billion. Plaintiffs agreed to settle for about $3 million, roughly 3 cents a share, and more than $1 million in legal fees.
``The class members appear to have received insufficient consideration in the form of a token cash increase in merger price, a virtually meaningless change in the calculation of the vote and several proxy disclosures for which the plaintiffs cannot even wholly claim credit,'' Lamb wrote.
The judge's ruling opens the door for a trial. Toronto- Dominion is trying to revive earnings at its slumping U.S. consumer bank. Edmund Clark, chief executive officer of the Toronto-based company, said in November it would focus on making TD Banknorth competitive in three or four years.
Neither TD Banknorth spokesman Jeffrey Nathanson nor plaintiffs' attorney James Notis replied to phone messages seeking comment.
Several Banknorth shareholders objected to the settlement amount. Objectors said plaintiffs' lawyers failed to argue that Toronto-Dominion officials violated a shareholders agreement by initiating the buyout negotiations with Banknorth. Lamb agreed.
Lawyers for the shareholders ``unreasonably'' chose not to pursue viable claims based on the violation of the stockholders agreement in exchange for a meager settlement, Lamb said.
TD Banknorth, based in Portland, Maine, with $1.95 billion in 2006 revenue, has branches in Maine, Massachusetts, New Hampshire, Vermont, Connecticut, New York, New Jersey and Pennsylvania.
Shares of Toronto-Dominion Bank rose 12 cents to C$73.12 today in trading on the Toronto Stock Exchange. They have gained 4.9 percent this year.
The case is In Re: TD Banknorth Inc. Shareholders Litigation, Consolidated CA2557-VCL, Delaware Chancery Court (Wilmington).
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TD Banknorth Inc.'s $4 million settlement of a shareholder suit over a buyout by its parent, Toronto-Dominion Bank, was thrown out by a judge who said the amount should be higher.
The accord is ``insufficient,'' Judge Stephen Lamb wrote in a decision issued today in Delaware Chancery Court in Wilmington. Six investors sued after TD Banknorth said in November that Toronto-Dominion would buy the 41 percent of TD it didn't own for $3.2 billion. Plaintiffs agreed to settle for about $3 million, roughly 3 cents a share, and more than $1 million in legal fees.
``The class members appear to have received insufficient consideration in the form of a token cash increase in merger price, a virtually meaningless change in the calculation of the vote and several proxy disclosures for which the plaintiffs cannot even wholly claim credit,'' Lamb wrote.
The judge's ruling opens the door for a trial. Toronto- Dominion is trying to revive earnings at its slumping U.S. consumer bank. Edmund Clark, chief executive officer of the Toronto-based company, said in November it would focus on making TD Banknorth competitive in three or four years.
Neither TD Banknorth spokesman Jeffrey Nathanson nor plaintiffs' attorney James Notis replied to phone messages seeking comment.
Several Banknorth shareholders objected to the settlement amount. Objectors said plaintiffs' lawyers failed to argue that Toronto-Dominion officials violated a shareholders agreement by initiating the buyout negotiations with Banknorth. Lamb agreed.
Lawyers for the shareholders ``unreasonably'' chose not to pursue viable claims based on the violation of the stockholders agreement in exchange for a meager settlement, Lamb said.
TD Banknorth, based in Portland, Maine, with $1.95 billion in 2006 revenue, has branches in Maine, Massachusetts, New Hampshire, Vermont, Connecticut, New York, New Jersey and Pennsylvania.
Shares of Toronto-Dominion Bank rose 12 cents to C$73.12 today in trading on the Toronto Stock Exchange. They have gained 4.9 percent this year.
The case is In Re: TD Banknorth Inc. Shareholders Litigation, Consolidated CA2557-VCL, Delaware Chancery Court (Wilmington).
