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Judge Ruled RBC Capital Markets Misled Rural/Metro Directors in 2011
Delaware Chancery Court Judge Travis Laster ruled that bankers at Royal Bank of Canada Capital Markets misled Rural/Metro directors in 2011 regarding the company’s value; all to push the board into a quick sale to buyout firm Warburg Pincus LLC.
“For improper motives of its own,” RBC misled Rural/Metro directors and prevented the board from getting the best price for investors, Judge Laster said.
Headquartered in Montreal, Quebec, and its operational head office in Toronto, Ontario, The Royal Bank of Canada, RBC Royal Bank or RBC Financial Group is the largest financial institution in Canada, as measured by deposits, revenues, and market capitalization. RBC is listed as the largest Canadian company by revenue and market capitalization by The Globe and Mail and is ranked at 50 in the 2013 Forbes Global listing.
The Royal Bank of Canada officials’ conflicts of interest tainted the US $438 million buyout of Rural/Metro Corp and according to Bloomberg News; the national ambulance service’s former investors deserved more for their shares. The judge ruled that the bank should be held liable to former shareholders of Rural/Metro Corp. The civil trial lasted four days.
According to a global Newsweek ranking, which measures how effectively companies manage environmental risks and opportunities relative to their industry peers, Royal Bank of Canada is the most environmentally friendly company in the world.
According to court filings, investors are seeking as much as US $172 million from Canada’s second-largest lender by assets. The judge said he would decide later how much in damages RBC must pay former stockholders of the company. For information about employment opportunities with the Royal Bank of Canada please click here.
The Scottsdale, Arizona-based Rural/Metro provides ambulance and fire fighting services to around 700 communities in 21 states. It has been reported that its directors sold the company to New York-based Warburg Pincus LLC at an unreasonably low $17.25 per share, a private-equity firm, according to Reuters, for US $438 million in March 2011. Rural/Metro shareholders sued over the buyout.
A spokeswoman for Toronto-based RBC, Gillian McArdle, did not respond to phone and e-mail messages seeking comment on Judge Travis Laster’s ruling in the Rural/Metro case.
Image credit: www.theglobeandmail.comJudge Ruled RBC Capital Markets Misled Rural/Metro Directors in 2011 by Jaan