Sovereign Bancorp Inc. Shareholders Litigation

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The class action lawsuit on behalf of Sovereign Bancorp Inc. (Sovereign) shareholders was intended to prevent the shareholder vote on a 2008 proposal by Banco Santander, S.A. (Santander) to acquire 75 percent of Sovereign’s outstanding shares.

Retained by Milbank, Tweed, Hadley & McCloy

The class action lawsuit on behalf of Sovereign Bancorp Inc. (Sovereign) shareholders was intended to prevent the shareholder vote on a 2008 proposal by Banco Santander, S.A. (Santander) to acquire 75 percent of Sovereign’s outstanding shares. The plaintiffs alleged that the merger should be stopped due to the allegedly low valuation assigned to Sovereign (e.g., the lack of a premium on Sovereign’s trading price used in the deal). Counsel for Santander, Sovereign, and Sovereign’s board of directors retained Cornerstone Research and Professor Anthony Santomero of the University of Pennsylvania and former President of the Federal Reserve Bank of Philadelphia to assess the valuation.

The case settled, allowing Sovereign to move forward with its originally planned shareholder vote.

Cornerstone Research worked with Professor Santomero to explain the macroeconomic environment, the credit crisis, the state of the banking industry post-2007, and the resulting impact on the value of Sovereign. Professor Santomero also worked with Cornerstone Research to analyze the impact of the deal on Sovereign and its constituents and to rebut the conclusion by the opposing expert that the acquisition price was low. The case settled, allowing Sovereign to move forward with its originally planned shareholder vote. The deal was approved.