National City shareholders sue over PNC sale

12/6/2008

CLEVELAND National City Corp. shareholders have filed about a dozen lawsuits in courts in Delaware, Cuyahoga County and elsewhere opposing the pending sale of the Cleveland-based bank to PNC Bank.

National City is being acquired by Pittsburgh-based PNC Financial Services Group Inc. for $5.6 billion. Shareholders of National City and PNC will get a chance to vote on the proposed sale at meetings scheduled for Dec. 23.

Former Ohio Attorney General Marc Dann represents a shareholder who has asked a judge to grant an injunction delaying the sale. Dann, who resigned as Ohio's attorney general amid a sexual harassment scandal in May, said the sale price is too low.

"There are so many questions about this deal," said Dann, now a private attorney in Cleveland. "This is a community asset, a community treasure. All we're asking for is to take a breather."

National City, Ohio's largest bank, has long been a business and civic pillar of Cleveland with a downtown headquarters that stands out on the city's skyline. U.S. Reps. Steven LaTourette and Dennis Kucinich have criticized the sale and questioned why PNC got federal bailout money and National City didn't.

Several lawsuits were rolled into a class-action suit filed three days after the sale was announced. That suit names National City Corp., its board of directors and PNC and accuses National City board members of failing to find the best possible deal.

A suit filed last week in U.S. District Court in Cleveland also names both banks and National City's board. Shareholders James and Caroline Tharp accused National City and PNC of filing a "false and misleading proxy statement," and said the sales process favors the banks and company insiders.

National City executives could receive tens of millions in severance payments, the Tharp's lawsuit said.

A second federal case, filed in U.S. District Court in Pittsburgh by another shareholder, said National City misled investors into believing the bank was on solid footing.

A National City spokeswoman and a PNC spokeswoman wouldn't comment on the lawsuits.

Another suit in Cuyahoga County, filed by shareholders in California and Ohio, may be joined with Dann's case. But with the Dec. 23 shareholder vote drawing near, there's little time left for Common Pleas Court Judge Jose Villanueva to rule on the injunction.

"I'm afraid it's close to being too late," Dann said.