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Bank Of NY Refuses To End Irving Bid

May 18, 1988

NEW YORK (AP) _ Bank of New York Co. is mapping a new battle plan against Irving Bank Corp., offering to sweeten its hostile buyout offer if Irving agrees to a deal but vowing to pursue its current bid if Irving spurns the new offer.

Bank of New York’s Tuesday announcement came one day after Irving said preliminary results from its May 6 annual shareholders’ meeting showed Irving had won a proxy fight for control of its board.

By re-electing Irving’s directors, shareholders are supporting the company’s defensive restructuring plan and stock sale to Banca Commerciale Italiana SpA, Italy’s second-largest bank. The proposal was made as an alternative to Bank of New York’s offer, which expires at midnight EDT May 24.

Bank of New York, which owns a 4.9 percent stake in Irving, is offering $15 in cash and 1.575 shares of its stock for each of Irving’s common shares outstanding. The offer is valued at around $64 a share or $1.1 billion.

The company said Tuesday it would be willing to raise the stock portion of its bid to 1.675 Bank of New York shares, adding $3.20 per share to the value of the deal, for a total of around $1.2 billion.

The hostile offer would be amended only if Irving removes its ″poison pill″ takeover defense by Friday, as it already has done for Banca Commerciale. The poison pill, which would make a hostile buyout prohibitively expensive, takes effect if an unfriendly suitor buys more than 5 percent of Irving’s shares.

In composite trading on the New York Stock Exchange, Irving closed up 75 cents to $61.37 1/2 Tuesday, while Bank of New York fell 87.5 cents to $31.12 1/2 .

Bank of New York also is asking Irving to take action to render New York’s anti-takeover law inapplicable. The law would prevent an unfriendly merger of the two banks for at least five years.

If Irving refuses to negotiate, Bank of New York plans to buy the Irving shares tendered as of May 24 and operate the bank as a subsidiary for five years, thereby skirting the state law.

Bank of New York said it owned or had been tendered about 62 percent of Irving’s 18.5 million outstanding common shares.

Irving spokesman David Santos said the bank holding company’s ″board will review the matter in due course.″

But banking analysts said it was doubtful Irving would agree to negotiate with its hostile suitor in light of its proxy fight victory.

″It doesn’t surprise me that the Bank of New York has amended the tender offer,″ said Michael Starr of Duff and Phelps Inc. in Chicago. ″Realistically, Irving is in the position now to dictate the outcome of the situation.

″I would expect they (Irving management) will continue to respond as they had in the past. They will say that the BCI offer is superior.″

Banca Commerciale is offering $75 a share for 9.5 million Irving shares, or about 51 percent, valued at $707 million. In addition, it said it would pay shareholders interest on the purchase price from May 31 until the deal closes.

The Banca Commerciale bid is part of a complex restructuring plan that includes asset sales, cost-cutting measures and a $10-a-share special cash dividend. Irving said the offer has a blended value of between $65.20 and $72.55 a share.

In an interview, Bank of New York Chairman J. Carter Bacot said, ″We’re optimistic we can work something out here. They (Irving management) profess to be in an auction. Here’s a chance for them to get a higher bid.″

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