Five shareholders of The South Financial Group have filed suit against the company, its directors and TD Bank Financial Group, alleging the merger agreement in which Canada-based TD Bank would acquire Greenville-based South Financial is unfair and contains a “shockingly low” offer price, the Greenville News reported earlier this week.
The suit alleges that the proxy filed with the US Securities and Exchange Commission “conceals and omits material information” that shareholders would need to evaluate the proposal, and that TD’s offering price of 28 cents a share represents a “great disparity, and apparent unfairness” to TSFG shareholders, given the company’s book value of $2.72 per share, the publication reported.
Without more information, TSFG shareholders can’t cast “an informed vote” regarding the proposed merger and the vote should be suspended, the suit says.
South Financial Chief Executive Lynn Harton told the News that “our belief is that there is no merit to the suit.”
After more than two years of hemorrhaging red ink, The South Financial Group announced on May 17 that it would be acquired by TD Bank Financial Group for a paltry 28 cents a share.
Under the agreement, TD will acquire all outstanding shares of common stock of TSFG, for about $61 million in cash or stock, which represented less than half of TSFG’s market value at the time.
TSFG has lost nearly $1.4 billion over the past two-plus years, including $85.8 million during the first three months of 2010.
A little more that five years ago, stock in South Financial was selling for more than $30 a share. The price proffered by TD represents a decline of more than 99 percent over the past half decade.
Even in early 2008, TSFG shares were going for more than $17 a share.