Marshall & Ilsley Corporation Investors File Second Lawsuit Against Buyout

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Company Name(s): 
Marshall & Ilsley
Case Name: 
Marshall & Ilsley Deal Case 12/20/2010
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 

Another investor in Marshall & Ilsley (NYSE:MI) filed another lawsuit also against directors of Marshall & Ilsley Corporation alleging breaches of fiduciary duties arising out of their attempt to sell Marshall & Ilsley Corporation too cheaply through an unfair process to the BMO Financial Group (Bank of Montreal).

According both complaints the plaintiffs allege Marshall & Ilsley Corporation , its board of directors and BMO Financial Group breached their fiduciary in connection with the proposed takeover.

On Friday, Dec 17, 2010 Marshall & Ilsley Corporation (NYSE: MI) and BMO Financial Group (or Bank of Montreal; TSX NYSE: BMO) announced that they have entered into an agreement under which BMO Financial Group will acquire all outstanding shares of common stock of Marshall & Ilsley in a stock-for-stock transaction, valued at approximately $4.1 billion. Under the terms of the proposed agreement, each outstanding share of Marshall & Ilsley Corp will be exchanged for 0.1257 shares of Bank of Montreal (BMO) upon closing. Based on the closing share price of Bank of Montreal on the TSX of C$62.05 on December 16, 2010, the transaction values each share of Marshall & Ilsley Corporation at US$ 7.75.

Shares of Marshall & Ilsley Corporation (MI) jumped from roughly $6 to almost $7 in response to the takeover news.

But the plaintiff claims that the proposed acquisition is the product of a flawed process that is designed to ensure the merger of Marshall & Ilsley Corporation with BMO Financial Group on terms preferential to BMO Financial Group but detrimental to the plaintiff and the other public stockholders of Marshall & Ilsley Corp.

The plaintiff say the offer substantially undervalues Marshall & Ilsley Corporation and is merely an attempt by BMO Financial Group to acquire Marshall & Ilsley Corp for a bargain price following the dramatic recession and unprecedented decline in real estate values of the past few years. MI investors will not receive proper value for their shares in the share exchange, as the exchange does not reflect the true value of Marshall & Ilsley (MI) shares. Marshall & Ilsley (MI) shares traded as early as October over $7.60 per share and during July at over $8.40 per share, leaving MI investors with practically no premium. Considering Marshall & Ilsley’s trading price in April 2010, where MI shares reached $10.19 per share, and that analysts have set a price target as high as $9.50 per share for Marshall & Ilsley stock, shareholder in MI (Marshall & Ilsley) share would hand their MI shares to Bank of Montreal at a significant discount.