Westamerica Sues to Block Security Pacific

Westamerica Bancorporation has filed suit against Security Pacific in U.S. District Court here in an attempt to block the Los Angeles-based banking giant from acquiring control.

Security Pacific holds a 4.97% stake in Westamerica, which is headquartered in San Rafael, and has applied to the Federal Reserve Board for permission to acquire the rest of the company through either a negotiated merger or a tender offer to Westamerica’s shareholders.

The hostilities between the two California banks come at a time when First Interstate Bancorp is studying its next move in its bid to acquire BankAmerica.

Reluctant Targets

Both takeover attempts feature reluctant targets in Northern California and anxious suitors in the Southland. But that is as far as the parallel goes.

Security Pacific is about 50 times the size of Westamerica, a thriving 34-branch bank serving Marin and Sonoma counties. First Interstate is about half the size of financially ailing BankAmerica.

Still, Security Pacific’s application to the Fed in the face of Westamerica’s opposition could shed light on regulatory attitudes toward hostile takeovers.

Although conventional wisdom holds that regulators frown on such transactions because they disrupt the banking system, Russell Freeman, Security Pacific’s executive vice president and general counsel, said, “I don’t think there is any basis to that view.”

Westamerica, in its suit filed Tuesday, charges that Security Pacific has engaged in an illegal “scheme” to take control of Westamerica by, among other things, “issuing deceptive, misleading, confusing and omissive public statements which have concealed and misrepresented Security Pacific’s true intentions.”

As evidence, Westamerica cited a Sept. 19 filing that Security Pacific made with the Securities and Exchange Commission describing Westamerica as “an attractive investment.” The filing added that Security Pacific wished to discuss “mutually advantageous business transactions” with Westamerica.

Security Pacific earlier this year purchased an option to buy 9.9% of Westamerica but has kept its ownership in the company below the 5% threshold that requires regulatory approval.

The suit seeks preliminary and permanent injunctions that would bar further purchases or proxy solicitations by Security Pacific.

Security Pacific’s Freeman said he was “surprised and disappointed” by the lawsuit and called it “totally without merit.”