Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 14, 1994 TAG: 9408050025
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
The suit had challenged the March 1, 1993, closing date of the merger, charging that the shareholder was denied a stock dividend paid by First Union.
The suit, filed by Irving Kas of New York in the U.S. District Court for Eastern Virginia at Richmond, had been certified as a class action, meaning he represented everyone who held Dominion stock at the time of the merger.
Defendants were First Union Corp. of Charlotte, N.C.; First Union Corp. of Virginia, based in Roanoke; and Warner Dalhouse, who was chairman of Dominion and is now chairman of First Union's Virginia subsidiary.
Kas contended that the merger should have taken effect on Feb. 26, 1993, so that former Dominion shareholders would have received a dividend of 35 cents a share paid by First Union on that date.
In his suit, Kas had cited statements in the merger documents that the acquisition of Dominion would be consummated "at the earliest practicable date." The Virginia Corporation Commission granted the final regulatory approval needed for the merger on Feb. 23, 1993.
Judge Robert Payne wrote in his opinion that it is "undisputed that all participants in the merger wanted it to be consummated as promptly as possible because Dominion was losing deposits, suffering from diminished employee morale and had received a 'troubled bank' letter from the Office of the Comptroller of the Currency."
He said Dominion stock closed at $12.88 a share Sept. 10, 1992. When the merger was announced Sept. 21, 1992, the closing price rose to $19.625.
Kas purchased a total of 1,017 shares on Nov. 18, 1992, and on Jan. 4, 1993, investing $23,249.91.
The judge's opinion said Kas realized a profit of $4,620.91, or almost 20 percent on his Dominion investment at the time of the merger some four months later.
Kas said he would not have invested in Dominion stock nor voted for the merger had he known he would miss out on the dividend, which would have been worth $207, or less than 1 percent of his investment, the judge said.
The opinion said that "there is no likelihood" that disclosure of the merger date and the dividend payment would have altered Kas' purchase of the stock and his decision to vote in favor of the merger.
"This finding is applicable to all Dominion investors who are part of this action," the judge wrote, pointing out that the value of their stock increased from $12.88 on Sept. 10, 1992, to $27.405 on the day of the merger.
The judge said there was no likelihood that any investor considered the one dividend in deciding whether to support the merger.
Although the proxy said the merger would take place as soon as practicable, the opinion said, the same documents said the date - and even the merger itself - was uncertain.
The opinion said First Union's press releases and press reports before mid-January 1993 uniformly predicted a merger in late March or early spring, while Dominion's internal documents projected a date of March 31, 1993.
In mid-January, with approvals arriving faster than expected, the opinion said, Dominion documents and press reports included a March 1, 1993, closing date.
Judith Spanier, a New York City lawyer representing Kas, said she "really couldn't say at this point" whether an appeal would be filed.
by CNB