George Nemeth · Marc Dann Files Complaint on Behalf of NCB Stakeholders

November 26th, 2008

An email:

Jones Day is Representing National City and Baker Hostetler is representing PNC. They have jointly filed a motion to stay discovery on the case we filed because they want the matter to be heard in Delaware where the law is more favorable to corporate management than shareholders and where no one affected by the merger lives. This is a bad deal for National City Bank Shareholders. First they were underpaid for their shares. The exchange ratio offered in the Proposed Transaction is unfair and grossly inadequate because, among other things, the intrinsic value of National City’s common stock is materially in excess of the amount offered for those securities in the Proposed Transaction in light of the Company’s prospects for future growth and earnings. In fact, the Proposed Transaction values each share of National City’s common stock at $2.23, an 18.9 percent discount from Thursday, October 23, 2008’s closing price of $2.75. There is a strong argument to make that the future of National City is a lot brighter than they have portrayed in defending the merger.

Political Leaders have also raised legitimate concerns about the possible inappropriate role of Federal Government Regulators in forcing the deal. Further, at the time the PNC deal was reached there were other legitimate suitors on the horizon including one who would have maintained Cleveland as its U.S. Headquarters.

On October 25, 2008, the Cleveland Plain Dealer, in an article entitled “National City Bank is sold; thousands of jobs at risk” stated, in part, as follows:

The news is among the worst that could come to National City, which, according to banking legend, actually originated the first mortgage in the United States. PNC, just 130 miles and less than three hours from National City’s headquarters, was one of a handful of banks known to be talking with National City this month about a possible deal.

Another contender, Scotiabank of Toronto, “would have been the best because you would have kept everything in Cleveland,” Cassidy [Gerard Cassidy of RBC Capital Markets in Maine] said.

A real conflict of interest arises because Corsair Capital will be paid a higher price for its shares and several of its principals voted as members of National City’s Board of Directors to merge.

There are serious legal and factual issues that must be explored before this deal is allowed to close and the most appropriate forum to review them is in Cuyahoga County Common Pleas Court. In this case the interest of National City Shareholders and interests of the community are perfectly aligned.

Here’s a PDF of the complaint Dann filed. Word is Dann is expediting discovery.

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