Bank’s shares up on bid

Shares of UnionBanCal Corp., California’s second-largest bank, rose 13% after controlling shareholder Mitsubishi UFJ Financial Group Inc. threatened a $3-billion hostile bid to buy out minority stakes.

Mitsubishi UFJ said it would make a direct offer to investors to purchase the 35% of the company it doesn’t already own for $63 a share, saying UnionBanCal’s independent directors refused to negotiate after rejecting an earlier $58 bid. UnionBanCal said it had been negotiating and would review the new offer. The shares topped the bid value as traders bet Mitsubishi UFJ would have to raise it again.

The bid for San Francisco-based UnionBanCal, parent of Union Bank of California, comes as California lenders struggle to stay solvent amid an avalanche of home mortgage defaults. IndyMac Bancorp Inc., once the second-largest independent U.S. mortgage company, was seized by regulators in July after a run on deposits. Vineyard National Bancorp said Monday that concerns about capital “cast significant doubt on our ability to continue as a going concern.”

A purchase by the Japanese lender would “demonstrate an enhanced commitment to the U.S. market” and give Mitsubishi UFJ “participation in the future consolidation of the U.S. banking market,” Katsunori Nagayasu, president of the Tokyo-based company’s main banking unit, said in the statement.

UnionBanCal shares rose $7.32 to $65.50. They have advanced 34% this year. The offer was an 8.3% premium to the stock price Monday.

After receiving the earlier offer on April 26, UnionBanCal formed a special committee of independent directors that determined the bid “did not reflect the fair value,” the company said in a statement Tuesday. UnionBanCal said its executives met with Mitsubishi UFJ’s bankers at Morgan Stanley as recently as last week to discuss the company’s value.