Bank Merger Battle Moves Courts
GREENSBORO, N.C. (AP) _ First Union Corp. and SunTrust Banks Inc. have agreed to move their court battle over competing merger offers for Wachovia Corp. to a special business court.
The North Carolina Business Court, established by the state several years ago to handle complex financial cases, will consider a challenge by SunTrust of a break-up provision in First Union’s $12.9 billion merger agreement with Wachovia, according to a court spokeswoman.
All litigation brought by the three banks will be moved to the business court.
The move followed a ruling last week by a federal judge in North Carolina to remand an approval for a temporary restraining order against SunTrust, issued by a lower state court, back to that court.
In a lawsuit filed last month in Atlanta, SunTrust asked the court to nullify the original option agreement between Wachovia and First Union that required a ``break-up fee″ of up to $780 million for First Union if another bank bought Wachovia.
The lawsuit challenged the legitimacy of Wachovia granting stock options to First Union as a deterrent to rival bids, such as SunTrust’s $13.7 billion offer.
The lawsuit was filed after Wachovia’s board rejected the unsolicited proposal from SunTrust and reaffirmed its plans to be bought by First Union.
Wachovia shareholders are scheduled to vote on the First Union merger proposal Aug. 3.
Shares of SunTrust rose 50 cents to $62.10 and shares of First Union rose 50 cents to $32.66, while shares of Wachovia fell 26 cents to $68, all on the New York Stock Exchange.