UPDATE 1-Wilmington Trust shareholders sue over sale to M&T

* Wilmington Trust’s shareholders sue over fire sale

* Shareholders seek to block sale

* Bargain price does not guarantee lawsuit success
(Updates with Wilmington Trust and M&T declining to comment)

By Tom Hals

WILMINGTON, Del., Nov 8 (BestGrowthStock) – Wilmington Trust Corp
(WL.N: ) has been sued by shareholders who accused the
century-old bank of agreeing to sell itself on the cheap,
causing its shares to nose dive.

M&T Bank Corp (MTB.N: ) agreed last week to buy Wilmington
for $351 million, little more than half the Delaware bank’s
market value at the time, reflecting Wilmington’s losses on
commercial mortgages and construction loans.

Wilmington had a market value of$650 million the day before
the merger and its stock fell more than 40 percent when the
deal was announced.

The merger “is the product of a flawed process that is
designed to ensure the sale of Wilmington Trust to M&T on terms
preferential to M&T, but detrimental to plaintiff and the other
public shareholders,” said one of two shareholder lawsuits
filed on Friday in Delaware’s Chancery Court.

The plaintiffs want the deal blocked until Wilmington
Trust’s board takes steps to get a higher price. Wilmington’s
directors were also sued in both lawsuits.

M&T Bank and Wilmington Trust, which dates to 1903
according to its website, both declined to comment.

Law specialists said Wilmington’s decision to sell itself
for a seemingly bargain price does not ensure shareholder
lawsuits will be successful.

“Lawsuits are kind of automatic in a case like this,” said
Adam Pritchard, a professor at University of Michigan Law
School. “So they file a lawsuit and do a little poking around.
A very large percentage of these lawsuits get dropped by the
plaintiffs when they don’t get any more facts to sustain the
case.”

The lawsuits contend Wilmington sold itself just as its
strategy to benefit from an economic recovery was taking hold.

One lawsuit also noted the Wilmington board’s approval in
June of a $3 million pay package for Chairman and Chief
Executive Donald Foley that included three years of severance
benefits upon a change of ownership.

Gordon Smith, a law professor at Brigham Young University
Law School, said the issue could be decided by looking at the
actions of the board.

“What were their options?” said Smith. How did the M&T deal
“compare to the other options the board had?”

Wilmington Trust shares closed down 1.8 percent at $4.23 on
Monday and M&T shares were down 0.6 percent at $82.22.

The lawsuits are Medich v Wilmington Trust Corp et al,
Delaware Court of Chancery, No. 5958, and Yi v Wilmington Trust
Corp et al in the same court, No. 5959.
(Editing by Andre Grenon)

UPDATE 1-Wilmington Trust shareholders sue over sale to M&T