NEW YORK -- Disappointed and angered by the New York Stock Exchange's decision Tuesday to let a modified version of Sovereign Bancorp Inc.'s (SOV) three-way transaction go through without a vote, dissident shareholders are pondering their next steps.
Despite the serious setback, a number of top institutional investors vowed not to give up their fight against the controversial deal, in which Sovereign would sell a stake to Banco Santander Central Hispano S.A. (STD) and use the funds to buy Independence Community Bank Corp. (ICBC).
Major shareholders - including Relational Investors LLC, Sovereign's largest investor and loudest critic - are considering whether to try to persuade the Securities and Exchange Commission to intervene and effectively overturn the NYSE's ruling. Investors also are weighing appeals to federal banking regulators and lawsuits to derail Sovereign's revamped deal.
But outside experts say - and some shareholders acknowledge - that the dissidents now face daunting challenges in trying to kill the transaction. That eventually will require the shareholders to shift their attention to ousting Sovereign's directors at the company's annual meeting next year.
The revamped agreement "addresses some of the more egregious issues," said Lee Delaporte of Dreman Value Management LLC, Sovereign's ninth-largest shareholder. "I'm still not excited about the ICBC acquisition, ... but it seems to me that at this point, the deal is going to move forward."