Pinola Says Sale of Assets Makes B of A Less Attractive as a Target
First Interstate Bancorp Chairman and Chief Executive Joseph J. Pinola on Friday assailed BankAmerica’s strategy of retaining its independence by selling such profitable operations as its Charles Schwab & Co. brokerage unit.
“What they are doing, every day, is making BankAmerica less attractive to its shareholders, and to me as a potential buyer,” the head of Los Angeles-based First Interstate said in an interview.
Pinola has been pursuing BankAmerica since the summer of 1985. But his carefully chosen words indicate that his ardor for BankAmerica may be cooling, or at least that he may be considering substantially modifying the terms of his $3.2-billion offer for the San Francisco-based parent of the Bank of America.
Alternatively, Pinola may be sending a message to BankAmerica shareholders that they would fare better under his $21-a-share hostile offer for the company than they would if BankAmerica Chairman A. W. Clausen succeeds in repelling the merger bid.
BankAmerica common stock closed Friday at $14.75 a share in composite trading on the New York Stock Exchange, down 37 1/2 cents.
Pinola argued that BankAmerica’s strategy of selling profitable units is draining future earnings power from the troubled company. Pinola has said he would want to keep the Schwab brokerage as part of the combined company because it brings with it a million customers and provides a product that would be difficult for First Interstate to build from scratch.
BankAmerica has reached a tentative agreement to sell the brokerage firm back to its founder, Charles R. Schwab, for about $250 million. An announcement of the sale is expected next week.
BankAmerica recently sold a profitable Italian subsidiary, Banca d’America e d’Italia, for $603 million. The sale allowed BankAmerica to post an $82-million profit in the fourth quarter despite continuing sizable operating losses.
Since Pinola first proposed the merger 18 months ago, BankAmerica has sold $16-billion worth of assets, including its FinanceAmerica consumer lending unit, its personal trust division, pieces of its credit card business, several foreign offices and a number of pieces of valuable real estate, including its San Francisco and Los Angeles headquarters buildings.
Clausen has insisted that the asset sales and restructuring program would have taken place even without a takeover threat. The plan is designed to benefit shareholders, Clausen has said, by more tightly focusing the bank’s business and strengthening the company’s weak capital position.
In the interview, Pinola did not engage in a point-by-point rebuttal of Clausen’s recent criticism of First Interstate’s merger offer. Clausen has attacked the offer as inadequate and suggested that Pinola and his management team are not qualified to run BankAmerica.
Pinola indicated that a response to Clausen would be forthcoming soon.
