Institutional Shareholder Services and Proxy Governance are separately recommending that their clients vote in favor of Providian Financial Corp.'s proposed merger with Washington Mutual Inc.
Putnam plans to vote its 7.5% of Providian shares against the merger, according to a Putnam statement. "Putnam regards the price as inadequate and believes recent fundamental trends and Providian management's outlook confirm Putnam's judgment on the value of the Providian franchise," it added.
"Some shareholders have voiced concern over the purchase price, but after analyzing a variety of factors, ISS found no basis to recommend against the deal on the basis of price," ISS said in a statement. "Additionally, the earnings multiple suggests the transaction value is reasonable — although we do conclude that the valuation is at the lower end of a reasonable range."
Gene Capello, Proxy Governance managing director-policy, said: "We think in the long run it will be good for Providian shareholders. We do have some reservations. We think the premium (of the proposed price) is minimal. ... Providian management will be joining the company to run Providian as a subsidiary of Washington Mutual, and we are concerned about conflicts (in the merger agreement)."
He also said Proxy Governance "couldn't tell if a decent job was done shopping the merger in order to provide the best deal for shareholders."
The Providian shareholder vote is scheduled for Aug. 31.