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NewAlliance Bancshares, Inc. investor Files Lawsuit Against Buyout

  • If you are current investor in NewAlliance Bancshares, Inc. (NYSE:NAL) , and/or have any information relating the investigation, you have certain options and you should contact the Shareholders Foundation, Inc.

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Lawsuit Overview

Company
NewAlliance Bancshares Inc.
Security
NYSE: NAL

Case Name
NewAlliance Bancshares Deal Case 08/25/2010
Type of Lawsuit
Mergers and Acquisition
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Summary

In effort to stop the proposed takeover an investor in NewAlliance Bancshares, Inc. (NYSE:NAL) has filed a lawsuit in State Court alleging breaches of fiduciary duty by the NAL board of directors for selling New Alliance Bancshares too cheaply to First Niagara Financial Group.
According to the complaint the plaintiff alleges that defendants breached their fiduciary duty by the attempt to sell NewAlliance Bancshares, Inc through an unfair process at an unfair price. On Thursday, August 19, 2010, NewAlliance Bancshares, Inc. (NYSE:NAL) and First Niagara Financial Group, Inc. (Nasdaq:FNFG) announced that the companies entered into a merger agreement, valued on a fixed exchange ratio of 1.10 shares of First Niagara stock for each NewAlliance share. Per yesterday's close, this represents $14.09 per NewAlliance share, or an approximate total transaction value of $1.5 billion, including transaction expenses.
According to NewAlliance Bancshares, Inc its board of directors has approved the transaction and per yesterday's close, the approximate blended value of the stock and cash consideration is $14.09 per share and this represents a premium of approximately 24% based on NewAlliance's closing price of $11.36, and a premium of about 19% over NewAlliance's 52-week average closing price, on August 18, 2010.

Shares of NewAlliance Bancshares, Inc. (NYSE:NAL) traded at roughly $11.50 per share days before the announcement and started trading on last Thursday at over $13 per share.

But the proposed deal provoked criticism from New Haven’s mayor John DeStefano as well as other local critics concerned about losing a major New Haven-based bank. The plaintiff alleges, among other things, that while “CEO Patterson stands to gain over $33.8 million from the transaction”, “the proposed acquisition is [..] the product of a flawed sales process not designed to maximize the value of the Company’s shares to stockholders, and does not appear to represent the best strategic alternative going forward for the Company”. NAL shares traded as high as high as $13.26 per share as recent as May 03, 2010, and as High as $13.26 per share on April 29, 2010. During 2008 NAL stocks traded as high as $16 per share, and during 2007 at almost $17 per share.