Riggs National’s Board of Directors has rejected the terms demanded by The PNC Financial Services Group in order for PNC to proceed with consummation of their previously announced Merger Agreement.
Riggs has sent a letter informing PNC that its actions constituted an anticipatory repudiation of the Merger Agreement and that Riggs is now entitled to discuss merger combinations with other interested parties. Riggs also said that it had been damaged by PNC’s decision not to proceed with the merger after Riggs had devoted the last six months preparing for the merger and taking various actions at PNC’s insistence. Accordingly, Riggs has filed suit against PNC in Superior Court for the District of Columbia to hold PNC responsible for its wrongdoing and for the resulting damages it has caused, or, alternatively, to require PNC to uphold its end of the agreement and proceed with the merger in accordance with the agreement.
Notwithstanding the continued stability of Riggs’ core franchise and the actions Riggs has taken to resolve its regulatory issues, PNC demanded revised terms and conditions in order for it to proceed with consummation of the merger agreement that it was informed Riggs would not accept, including requiring Riggs to: agree to a sharp reduction in the agreed-upon $24.25 per share purchase price; settle at least one private litigation pre-closing and settle or reserve against several other outstanding private litigations, even though Riggs believes these claims are without merit; and meet new and unspecified financial and other conditions. Specifically, PNC most recently proposed a transaction in which Riggs’ shareholders would receive tentative “upfront” consideration of approximately $19.32 per share (which remained subject to possible downward adjustment) and a contingent security that could pay up to approximately $0.83 per share.
Riggs stated, “PNC knew that its revised terms and conditions would be unacceptable to Riggs. In addition to the price, we are particularly disturbed by PNC’s new insistence that Riggs settle or reserve against private litigation as a condition of closing, even though we believe these claims are without merit.”
Riggs continues to believe that the interests of its shareholders and other constituencies will be best served by a combination with a larger institution and Riggs will continue to pursue this strategic goal.
murdok | Breaking eBusiness News
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