Midland Shareholders OK Crocker National Merger

The last hurdle to the full merger of London-based Midland Bank and Crocker National Bank was cleared Thursday when Midland’s shareholders voted overwhelmingly to approve the combination.

The $224-million stock-swap proposal was approved by 99% of Midland’s shareholders voting at a special meeting in London. Crocker’s shareholders agreed to the merger at the bank’s annual meeting in San Francisco on Tuesday.

Midland has held a majority interest in California’s fifth-largest bank since 1981. It announced its plan to seek 100% ownership last summer. The merger will take effect as early as next week, after certain technical conditions are met, Midland officials said.

“Eliminating the minority equity interest will allow us to achieve changes in the structure of Crocker’s operations so as to bring them into closer alignment with Midland’s operations,” Midland Chairman Sir Donald Barron said. “These changes are designed to improve the (Midland) Group’s overall effectiveness in international and other markets, to strengthen the financial position of Crocker and to improve its profitability.”

Crocker lost $324 million last year and $10 million in 1983 because of bad loans in real estate, agriculture and Latin America. Midland’s profit last year, excluding Crocker, was $448 million at current exchange rates.

“We believe that the strength of the rest of the group will support the rehabilitation of a fully owned Crocker, which should in due course produce a satisfactory contribution to our group results,” Barron said.

Under the merger agreement, each share of Crocker common stock will be exchanged for 0.54 share of a new issue of Crocker preferred with a target trading price of $27 a share. Dividends will be set at a variable rate based on the interest rate paid on several U.S. Treasury securities.

Meanwhile, a number of Crocker shareholder suits challenging the merger and seeking restitution for the declining value of the shares were resolved Tuesday when the Delaware Chancery Court approved a settlement plan. The agreement calls for Crocker to pay certain shareholders who lost money on their stock investment $1.75 million and an additional $1.75 million in legal fees.