The complaint alleges violations of state law by the Board of Directors of Danvers relating to the proposed acquisition of the company by People's United Financial, Inc. ("People's"), the holding company for People's United Bank. The complaint alleges that Danver's Board of Directors breached its fiduciary duties by failing to maximize shareholder value, among other things.
On January 20, 2011, the complaint states, People's and Danvers announced that they entered into a definitive agreement for People's to acquire Danvers in a transaction valued at approximately $493 million. The complaint alleges that under the terms of the agreement, Danvers shareholders will receive either $23 per share in cash or 1.624 shares of People's stock for each share of Danvers, whereby 55% of the company shares will be exchanged for stock and 45% for cash.
Following the merger, Danvers shareholders will own approximately 4.8% of the combined company. The complaint alleges that rather than permitting Danvers's shares to trade freely and allowing its shareholders to reap the benefits of Danvers's increasingly positive prospects, organic growth within its loan portfolio, and the overall improvement of the company's net interest margin, the Board of Danvers has acted for its own benefit and the benefit of People's by entering into the merger. Thus, the complaint alleges, the Board has effectively placed a cap on Danvers's corporate value at a time when the company's stock price was poised to capitalize on its positive and encouraging financial outlook. Further, the complaint alleges that Danver's Board agreed to preclusive deal protection devices to ensure that no competing offers will emerge, including a no shop provision, a standstill provision, and a termination fee of up to $19.725 million.
