Australian Suitor Offers $12 Million : Board Approves Sale of Citizens Bank

After months of hiding the identity of their latest suitor, directors of Citizens Bank of Costa Mesa disclosed Thursday that they have approved a $12-million cash offer from Australian industrialist Richard Pratt.

Pratt, whose Pratt Group is the largest manufacturer of corrugated boxes in Australia, would create a new bank holding company to purchase all 1.1 million outstanding shares of Citizens common stock for about $11 a share, according to Citizens’ President Paige Simpson.

The agreed-upon tender price will be 1.5 times the adjusted book value of the bank on Aug. 31, 1985, plus the adjusted earnings of the bank from Sept. 1 until the closing of the deal, which is expected in January.

Third Offer in Two Years

This marks the third time in two years that Citizens has entertained an offer to sell the 13-year-old institution. The bank previously held talks with a group of Hong Kong investors and with La Habra-based Landmark Bancorp. With five of six directors more than 65 years old--and two in their 70s--Citizens has been considered a likely candidate to be acquired. “There isn’t a month that goes by” that the bank has not received an inquiry, Simpson said.

Acknowledging that this is the third set of acquisition talks for the bank, Simpson said: “This has gone further than the other times. We’ve done a more prudent job of checking these people out . . . and I have a more comfortable feeling with these people than anyone we have ever talked to before.”

In a letter to the bank’s shareholders, Simpson said that customers may expect “little if any change in the daily bank operations and policies and little if any participation by the Pratt family in the day-to-day operations of the bank.”

Government OK Needed

If the offer is approved by government regulators, Simpson, 66, would continue as president of the bank, and Robert Ucciferri, 48, would stay on as Citizens’ executive vice president. Pratt, however, would expand Citizens’ six-member board of directors with three of his own representatives. The same three would also sit on the board of the new holding company, Citizens Holdings, with Simpson as its chairman.

According to a 1983 annual report, the Pratt Group had its beginnings in 1948 when Leon Pratt saw the need for “properly packaged fruit and vegetables” and went into partnership with a small box-making firm. The business grew to become the largest in Australia and has since extended its activities to plastics, waste reclamation and laminating, in addition to boxes and cartons.

Today, the Pratt Group controls a multinational group of companies which employs more than 2,000 people and had revenues of more than $240 million in Australian dollars in 1983, the latest period for which figures were available. (Recently, the Australian dollar has been worth about $1.46 in U.S. currency.)

Simpson said that Pratt, who also owns a merchant bank in Hong Kong, was told by his financial advisers to diversify his holdings and look for a stable institution to buy in America.

Pratt could not be reached for comment, but the man who helped scout out Citizens Bank for him, Dr. Martin Cadet of Northern California, confirmed the offer.

Edward Carpenter, a Costa Mesa-based banking consultant, said the sale would give Citizens Bank the ability to grow without having to worry about its future capital position.

Moreover, he said: “This is a unique opportunity for shareholders to receive an all-cash deal in a market where all-cash deals are very rare.”

Carpenter said that the deal was also good for Pratt, who Carpenter says gets a “stable bank with a strong operating history, a solid management team and hidden assets--such as the three buildings it owns--that can be sold to help recapture some of the purchase price.

Posts Consistent Profits

“Foreign investors don’t like surprises, especially when they are 13 hours away by plane,” Carpenter said. “Citizens Bank is a good quality, predictable institution without a lot of surprises. What you see is what you get.”

Citizens Bank opened in 1972 and has posted consistent profits. As of June 30, the three-office bank had in excess of $87 million in assets and $79 million in deposits. Simpson said Thursday that August was “the best month in Citizens’ history” with $128,000 in profits. He said the bank expects to post $1 million in profits by the end of the year.

Simpson and board member Robert Olander are the two largest stockholders.