Only Interested in Friendly Deal, Car Maker Says : Ford Emerges as Possible Bidder for Charles Schwab
Ford Motor, already a major player in financial services through its First Nationwide Savings unit, expressed interest Wednesday in acquiring discount broker Charles Schwab & Co. from ailing BankAmerica.
But Anthony M. Frank, chairman and chief executive of First Nationwide, said in an interview that Ford would buy Schwab only if it could secure the cooperation of company founder Charles R. Schwab.
“Ford isn’t in the habit of doing hostile deals,” Frank said. Schwab, however, is putting together his own proposal to buy the San Francisco-based company, which he sold to BankAmerica in 1983 but of which he remains chairman and chief executive. While he is not likely to embrace Ford’s overture unless his own plan founders, Ford’s approach might provide him a palatable alternative.
Former Business Partners
“The idea would be to leave Chuck in control of the company,” Frank said. Schwab could not be reached for comment.
Schwab and Frank are longtime friends and former business partners. From 1981 through 1983, First Nationwide owned a 20% stake in the discount brokerage firm, tripling its $4-million investment when BankAmerica acquired the company.
First Nationwide, a federal savings and loan company headquartered in San Francisco, is not related to the similarly named First Interstate Bancorp, the Los Angeles-based banking company that has proposed to acquire BankAmerica for a package of securities that First Interstate values at $3.4 billion, or $22 a share.
BankAmerica’s decision to put Schwab on the block was triggered by First Interstate’s unsolicited bid. Salomon Bros., BankAmerica’s investment banker, is preparing a brochure describing the brokerage unit, whose possible buyers also include Security Pacific National Bank and Citicorp.
Kennedy, Cabot Expresses Interest
Citicorp is also known to be seeking regulatory approval to try to buy BankAmerica’s lucrative retail operations in California, perhaps through Citicorp Savings.
Another self-proclaimed possible bidder for Schwab is the discount brokerage firm of Kennedy, Cabot, which is based in Beverly Hills. David P. Kane, president of Kennedy, Cabot, eschews Ford’s friendly approach. “I’d fire everybody,” Kane said in a telephone interview Wednesday. He added that he is trying to line up financing through the Bear, Stearns & Co. investment banking firm.
Although Kane’s chances of prevailing are slim, jumping into the fray gives him a platform from which to declare that his firm’s commissions are far lower than Schwab’s.
BankAmerica declined to comment Wednesday on the expressions of interest in Schwab from Ford and Kane.
Meanwhile, sources said First Interstate’s management is nearing a decision on its next move in its bid to snare BankAmerica. Last week, BankAmerica asked First Interstate to withdraw the bid, a request that First Interstate has ignored.
Sources close to First Interstate said a hostile bid would pose problems because the bidder would have no chance to closely scrutinize Bank of America’s problem-plagued loan portfolio.
A more likely course, should First Interstate decide to continue its pursuit of BankAmerica, would be to launch a proxy fight to elect directors inclined to embrace a merger between the two companies.
“We are considering it,” a First Interstate spokesman said, though he denied a published report that the company has made contact with a proxy-solicitation firm.
First Interstate’s management, led by Chairman and Chief Executive Joseph J. Pinola, is expected to present its recommendation to First Interstate’s directors at a board meeting on Monday.
“We’ve made our move,” a BankAmerica official said Wednesday. “The ball is in their court.”