Hongkong & Shanghai Offers $83 a Share : Second Bid Convinces Marine Midland

Marine Midland Banks Inc. said Tuesday that it accepted Hongkong & Shanghai Banking Corp.’s sweetened $756-million buyout bid, an offer analysts predicted would go over well with shareholders.

Under the agreement, a wholly owned subsidiary of the Hong Kong-based banking company would pay $83 per share, plus a special cash dividend of 51 cents per share for the 48% of Marine’s 18.87 million shares that it does not already own.

Hongkong & Shanghai, one of the world’s 25 largest banks, had offered a $70-a-share deal worth about $600 million in July, sending Marine’s stock soaring past $70. But despite the apparent signal that investors believed that the offer was too low, the Hong Kong company initially said it did not intend to boost its bid.

Analysts said the latest offer was made as a concession to shareholders, and they predicted that it would be approved by them at a special meeting set for Nov. 12.

“It will go through. It’s a good price,” said Linda Fluegge, a bank analyst with Merrill Lynch. “I just think it’s a good deal.”

“There was already a fairly vocal shareholder group that said, ‘Look, this deal is worth more,’ ” added James H. Wooden, senior bank analyst for Shearson Lehman Bros. “In fact, there was some analysis that it should have been in the triple figures.”

Marine shares jumped $5.125 to $81.75 in trading on the New York Stock Exchange.

Marine said a special committee of Marine directors established to negotiate with the Hong Kong bank accepted the agreement in principle and would recommend approval to the full board today.

Marine would remain an independent U.S. bank with its own name and separate headquarters, and current management would be retained under the agreement.

Marine Chairman John R. Petty said: “With this agreement, continuity is assured and we can move forward together, with the formidable combined resources and expertise of both our organizations.”

Marine Midland, based in Buffalo, has assets of $24.4 billion. The bank had about 18.87 million shares outstanding as of June 30, spokesman Barry Koling said.

Hongkong & Shanghai, with assets of $91 billion, began buying into Marine Midland in 1979, gradually increasing its stake to more than 50%.

Fluegge said the deal should help Marine in its effort to reach the industry’s top tier.

“They had already started moving along, cleaning up their balance sheets, and with all the capital Hongkong & Shanghai can put in, this will help,” she said.