APG — fund manager for the €208 billion ($286 billion) Stichting Pensioenfonds ABP, Heerlen, Netherlands — is suing Bank of America for misleading shareholders in proxy materials used to gain approval for the bank’s $29.1 billion acquisition of Merrill Lynch, according to court documents filed in the U.S. District Court in New York.
The proxy statements failed to disclose “that BofA had approved a secret bonus schedule giving authority to Merrill to pay bonuses up to $5.8 billion to Merrill employees” and “negligently failed to disclose BofA’s inadequate due diligence performed” prior to acquiring Merrill, according to the lawsuit, filed March 16. The lawsuit also alleges that BofA officials failed to disclose that they had “internally written down Merrill’s goodwill by $2.3 billion, and negligently failed to disclose massive fourth-quarter losses mounting” prior to the shareholder vote held Dec. 5, 2008.
ABP held BofA common shares from Oct. 10, 2008, to around Jan. 20, 2009. The stock dropped from $17.84 on Dec. 8 — the first trading day after the shareholder vote — to $5.10 on Jan. 20, according to the court documents. Information on how many shares ABP held during that period was not available by press time.
“There is no doubt that shareholders would have found the information withheld vital to an informed vote and rejected the merger if they would have had knowledge of the concealed facts,” according to a separate statement about the court proceedings posted on APG’s website today.