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Shareholder Sues to Block M&I Deal

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Milwaukee, WI: A lawsuit attempting to block the acquisition of Marshall & Ilsley Corp by the parent company of Harris Bank alleges the price of the deal is unfair to shareholders and the sale was "designed to benefit" M&I's leadership team.

The lawsuit, filed in Milwaukee County Circuit Court on Monday by an M&I shareholder from Bellerose Manor, N.Y., accuses M&I and its board of directors of breaching their fiduciary duty by entering into an agreement to sell Milwaukee-based M&I to Toronto's BMO Financial Group in a stock swap valued at $4.1 billion. BMO also is named as a defendant.

The lawsuit, which seeks class-action status, contends the price of $7.75 a share "substantially undervalues M&I and is merely an attempt by BMO to acquire M&I for a bargain price following the dramatic recession and unprecedented decline in real estate values of the past few years." The deal does not represent the true value of M&I shares, the lawsuit asserts.

The lawsuit notes that M&I stock traded for as much as $10.66 a share as recently as April 21, and that one analyst had set the price target for M&I stock at $9.50 a share.

The two banking firms announced last Friday that BMO Financial intends to buy M&I in a transaction scheduled to close on July 31, 2011.

M&I, which has posted eight consecutive quarterly losses as it has dealt with defaults on real estate loans, said the combination with BMO would make for a stronger bank with more products and services. The lawsuit suggests M&I was making progress toward a turnaround on its own.

M&I, with assets of almost $52 billion, is the largest bank based in Wisconsin.

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