First Interstate and B of A Fire Volleys in Takeover Battle

First Interstate and BankAmerica exchanged volleys again Monday, with First Interstate registering the securities it plans to use in its effort to buy BankAmerica and BankAmerica Chairman A. W. Clausen accusing First Interstate of pursuing the merger in a “reckless” and possibly illegal manner.

The First Interstate registration statement with the Securities and Exchange Commission repeats the terms of its latest takeover proposal. It lists securities it says are worth $21 for each of BankAmerica’s 154 million common shares, for a stated value of $3.23 billion.

A First Interstate spokesman said the company would still prefer to negotiate a friendly merger with BankAmerica but was filing the registration statement and seeking Federal Reserve Board approval for the deal in preparation for launching a hostile stock exchange offer if its friendly overtures are rejected.

The company intends to commence the exchange offer “as promptly as practicable” after the registration statement is declared effective, which could be in a few days to a few weeks.

First Interstate also has said that the offer is contingent on shareholder and Fed approval, a majority of BankAmerica shares being tendered and verification of the accuracy of BankAmerica’s financial statements.

The exchange offer would expire Feb. 28, 1987, unless extended.

BankAmerica’s board and management have declared that they see no reason to merge the bank with First Interstate or anyone else at this time.

Clausen repeated that view in his strongest language so far in an acidic letter delivered Monday to First Interstate Chairman Joseph J. Pinola, who spent 25 years at BankAmerica, some of them under Clausen.

“We have several times advised you that we do not think that it is feasible to negotiate a merger between First Interstate and BankAmerica in an atmosphere of bear hugs, press leaks and public disparagement,” Clausen said in the two-page letter.

He said Pinola’s actions raise doubts about his intentions, suggesting that Pinola may be trying to weaken BankAmerica’s public reputation and drive it into an unwanted merger. Clausen also said that Pinola may be violating state law, which prohibits spreading derogatory information about a financial institution. He said he had referred the question to counsel.

“We have not rejected your proposals. We have given them very careful consideration,” Clausen wrote. But he noted that the proposed merger would have profound effects on shareholders of both companies and that neither firm should rush into such a decision.

“Your failure to recognize this strikes us as reckless. It raises fundamental questions about First Interstate’s management and compliance by the First Interstate board of directors with its fiduciary duties.”

Clausen said BankAmerica’s board would consider First Interstate’s offer “early in 1987.”

A bank spokesman said that probably meant the next BankAmerica board meeting, planned for Jan. 5.

A First Interstate spokesman declined to comment on the Clausen letter.