PHILADELPHIA, March 22 /PRNewswire-FirstCall/ -- Sovereign Bancorp, Inc.
(NYSE: SOV) and Relational Investors LLC, Sovereign's largest shareholder,
announced today that they have agreed to settle all their outstanding
differences, to work together to build a better bank for Sovereign's
shareholders and other constituencies, and to add two new directors to
Sovereign's board.
As part of the agreement, the Sovereign board has today elected Ralph V.
Whitworth, a principal of Relational, to serve as a member of Sovereign's
board and agreed to re-nominate him at the 2006 annual meeting of shareholders
for a term expiring in 2009. In addition, Sovereign has agreed to appoint a
second new independent director, who will be selected by Sovereign's board
from lists of candidates provided by Relational of high caliber persons of
national reputation with no prior involvement with Relational or Sovereign.
Also as part of the settlement, both sides have agreed that they will take
all steps necessary to cause existing litigation to be dismissed, and to
withdraw complaints, applications, and filings with or by all governmental and
regulatory bodies that are adverse to the interests of the other party.
Relational will withdraw all regulatory objections to the pending acquisition
of Independence Community Bank Corp. by Sovereign, and to the proposed
investment by Banco Santander Central Hispano, S.A. in Sovereign. Relational
also agreed not to take any other actions to prevent or delay either the
Independence or the Santander transactions, which Sovereign anticipates will
be closed during the second quarter of this year following receipt of all
necessary regulatory clearances.
To reinforce and enhance its commitment to strong corporate governance,
Sovereign has agreed that its board will retain a nationally recognized firm
not previously associated with Sovereign or Relational to study Sovereign's
policies on related party transactions, disclosure and other corporate
governance matters in the context of the practices of the nation's largest
financial institutions. Following receipt of this study, the Sovereign board
will proceed to take such action as it deems appropriate with respect to
future policies as determined by a majority of its board.
"We are delighted to have these disputes resolved and put behind us," said
Jay Sidhu, chairman, president and CEO of Sovereign. "Sovereign has a proven
track record of creating more than a 200% increase in shareholder value over
the last ten years, and our board, including Ralph Whitworth, our other new
director and the Santander and Independence Community Bank representatives,
will work together to continue to deliver superior value going forward."
"I am pleased to achieve our original objective of obtaining board
representation, and I look forward to working constructively with the board
and Sovereign's management team to build share value for the future," Mr.
Whitworth said.
The agreement also calls for Relational, so long as the Agreement remains
in effect, to vote its shares for the election of the board's nominees for
election as directors and to observe certain normal and customary standstill
provisions. The agreement will remain in effect through Sovereign's annual
meeting of shareholders in 2012, unless, among other things, Sovereign
declines to nominate Mr. Whitworth or another Relational designee to stand for
election for a three-year-term at Sovereign's 2009 annual meeting. In any
such event the agreement would be subject to termination at such time in 2009.
Representatives of Richard C. Breeden & Co., advisers to Relational,
participated in the discussions leading to this agreement along with counsel
for both parties.
Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), is the parent company
of Sovereign Bank, a $64 billion financial institution headquartered in
Wyomissing, Pa., with more than 650 community banking offices, over 1,000 ATMs
and approximately 10,000 team members with principal markets in the Northeast
United States. Sovereign offers a broad array of financial services and
products including retail banking, business and corporate banking, cash
management, capital markets, wealth management and insurance. Sovereign is the
18th largest banking institution in the United States. For more information on
Sovereign Bank, visit http://www.sovereignbank.com or call 1-877-SOV-BANK.
Sovereign Bank, its logo and lantern are service marks of Sovereign Bank
or its affiliates or subsidiaries in the United States and other countries.
About Relational Investors Relational Investors LLC is a registered investment
advisor and asset management firm located in San Diego, California managing
$6.1 billion. Additional information about Relational is available on their
website at http://www.rillc.com.
This press release contains statements of Sovereign's strategies, plans,
and objectives, as well as estimates of financial condition, operating and
cash efficiencies and revenue generation. These statements and estimates
constitute forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995), which involve significant risks and
uncertainties. Actual results may differ materially from the results discussed
in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to, general economic conditions,
changes in interest rates, deposit flows, loan demand, real estate values and
competition; changes in accounting principles, policies, or guidelines;
changes in legislation or regulation; Sovereign's ability in connection with
any acquisition to complete such acquisition and to successfully integrate
assets, liabilities, customers, systems and management personnel Sovereign
acquires into its operations and to realize expected cost savings and revenue
enhancements within expected time frame; the possibility that expected one
time merger-related charges are materially greater than forecasted or that
final purchase price allocations based on the fair value of acquired assets
and liabilities and related adjustments to yield and/or amortization of the
acquired assets and liabilities at any acquisition date are materially
different from those forecasted; other economic, competitive, governmental,
regulatory, and technological factors affecting the Company's operations,
integrations, pricing, products and services; and acts of God, including
natural disasters.
SOURCE Sovereign Bancorp, Inc.
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Related links:
http://www.sovereignbank.com
http://www.rillc.com
CONTACT:
Financial Contacts, Mark McCollom,
+1-610-208-6426, mmccollo@sovereignbank.com, or Stacey Weikel,
+1-610-208-6112, sweikel@sovereignbank.com; or Media, Ed Shultz,
+1-610-207-8753, eshultz1@sovereignbank.com, all of Sovereign
Bancorp, Inc.; or Mike Pascale, or Tom Johnson, both of The
Abernathy MacGregor Group, +1-212-371-5999
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