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Relational Investors LLC today said that Sovereign
Bancorp, Inc.'s (NYSE: SOV) announcement that it would postpone its
annual shareholder meeting by over four months represents still
another egregious assault on the rights of its shareholders. In
Relational's view, Sovereign's board has now lost any remaining
modicum of credibility.
In order to preserve its rights and the rights of all
shareholders, Relational today amended its counterclaim in the
existing litigation in the Southern District of New York to request
that the court block what Relational believes is a destruction of
fundamental shareholder rights. As part of its claim, Relational
asserted that it believed that the sole purpose for Sovereign's recent
actions was to ensure that current shareholders' votes were diluted in
the face of Relational's effort to elect two directors and remove
Sovereign's board.
Relational believes that Sovereign purposefully sought to avoid
putting the proposed Independence Community Bank (Nasdaq: ICBC) and
Santander (NYSE: STD) transactions to a shareholder vote because it
feared that shareholders would reject them. If Sovereign can delay the
annual meeting long enough to close the Santander transaction,
existing shareholders' voting power at the annual meeting will be
diluted by at least 20%. In addition, Sovereign recently repudiated 13
years of public disclosure to shareholders regarding their right to
remove directors at any annual meeting without cause, claiming that
such statements were made "in error."
Sovereign justifies postponing the shareholders' meeting because
"it is essential for management to focus its full attention on
(Sovereign's proposed acquisition of Independence Community Bank) and
integration..." This is disingenuous, particularly considering
Sovereign's announcement in October that it intended to close the
Independence and Santander transactions around July 1, more than two
months after the originally scheduled annual meeting, its multiple
statements about its ability to integrate Independence and its
commitment to superior shareholder rights and proper corporate
governance. Moreover, in our view Sovereign's claim that the meeting
needed to be postponed because of "the potential confusion created by
Relational Investors' recent statement that it would seek to remove
the entire Board without cause" fails even to meet the straight face
test. The only "confusion" on this point -- if there be any -- is the
result of Sovereign repudiating 13 years of public disclosure
concerning shareholders' right to remove directors at any annual
meeting without cause.
Ralph Whitworth, Principal of Relational, said: "Sovereign's board
continues to march forward on its cynical campaign to deprive its
shareholders, at their expense, of the right to vote on
transformational transactions and vote on the very directors they are
entitled to elect. We are confident that neither our legal system nor
our free market system will allow these machinations to prevail over
the owners of the company. We will respond to these actions vigorously
and relentlessly and seek every available remedy under the law."
About Relational Investors
Relational Investors LLC is a registered investment advisor and
asset management firm located in San Diego, California managing $6.1
billion. Additional information about Relational is available on their
website at www.rillc.com.
Further Information About Relational's SEC Filings
On October 20, 2005, Relational, together with a number of
affiliated persons and entities that may be deemed "participants" for
purposes of the solicitation rules of the Securities and Exchange
Commission ("SEC"), filed a preliminary proxy statement on Schedule
14A with the SEC relating to a possible solicitation of proxies from
the shareholders of Sovereign Bancorp, Inc. ("Sovereign") in
connection with Relational's nomination of Ralph Whitworth and David
Batchelder for election to Sovereign's board of directors at
Sovereign's 2006 Annual Meeting of shareholders. On December 13, 2005,
Relational filed with the SEC a revised preliminary proxy statement.
Relational will prepare and file with the SEC a definitive proxy
statement relating to their nomination of Messrs. Whitworth and
Batchelder and may file other proxy solicitation materials. RELATIONAL
ANTICIPATES THAT IT WILL FURTHER REVISE AND FILE THE PRELIMINARY PROXY
STATEMENT AND SHAREHOLDERS ARE URGED TO READ THE PRELIMINARY PROXY
STATEMENT AS REVISED (AND THE DEFINITIVE PROXY STATEMENT, WHEN IT
BECOMES AVAILABLE) BECAUSE IT CONTAINS IMPORTANT INFORMATION REGARDING
RELATIONAL'S NOMINATION OF MESSRS. WHITWORTH AND BATCHELDER FOR
ELECTION AS DIRECTORS. The preliminary proxy statement is, and the
revised preliminary proxy statement and the definitive proxy statement
(when they become available) will be, available for free at
www.sec.gov, along with any other relevant documents. You may also
obtain a free copy of the preliminary proxy statement, or the
definitive proxy statement (when it becomes available), by contacting
Maudie Holland of Relational at (858) 704-3321, or by sending an email
to maudie@rillc.com. Information regarding the names, affiliation, and
interests of persons who may be deemed to be participants in our
solicitation of proxies of Sovereign's shareholders is available in
the preliminary proxy statement filed with the SEC on October 20, 2005
and the revised preliminary proxy statement filed on December 13,
2005.