Valley Federal Rejects Citadel Bid : S&L;’s Board Dismisses $112-Million Offer as ‘Inadequate’
Valley Federal Savings & Loan on Thursday rejected as inadequate a $112-million takeover offer from Citadel Holding, the parent of Fidelity Federal Savings & Loan.
The decision by Valley Federal’s board was not a surprise. The Van Nuys-based thrift, which has $3.3 billion in assets and 47 offices in California, has turned a cold shoulder to Citadel since November, when Citadel first announced its intention to seek a merger.
Moreover, Valley Federal said it continues to hold talks with other potential merger partners. The S&L; has not identified those parties, but industry sources say the leading suitor is Home Federal Savings & Loan of San Diego. Home Federal has declined to comment.
Citadel, headquartered in Glendale, has already obtained options and commitments to acquire 2.27 million, or 39.2%, of Valley Federal’s 5.8 million common shares outstanding for $18.50 a share, plus a $2-a-share premium for being granted the options by certain stockholders. On Jan. 14, Citadel also offered to buy the remaining 3.53 million shares for $18.50 a share in cash. The offer is well below the recent open-market price of Valley Federal’s stock, which fell 25 cents a share to $20.50 in national over-the-counter trading Thursday. Valley Federal’s announcement was made after the markets closed.
Board Opposed
But Citadel, with $3.8 billion in assets and 30 offices, has said it is prepared to sweeten its bid if Valley Federal grants its request to examine Valley Federal’s confidential financial data. Citadel also has proposed that, if Valley Federal receives a “bona fide firm cash offer” from another “reputable” thrift before Feb. 12, Citadel will top that offer by $1 a share. No such offer had emerged as of Thursday.
Regardless, Valley Federal said, its nine-member board, at a regularly scheduled meeting, voted unanimously against Citadel’s $18.50-a-share bid and did not even entertain its offer to top a competing tender offer.
Valley Federal Chairman Joseph R. Biafora released a statement saying the latter proposal “is so conditional and indefinite as to be meaningless.”
But in a telephone interview, Citadel Chairman James A. Taylor said: “Let somebody put a bid out there and find out how meaningless (Citadel’s proposal) is.”
He also said Citadel’s next step will be to exercise its options and commitments and actually purchase 39.2% of Valley Federal’s stock.
Any change in control of Valley Federal would have to be approved by the Federal Home Loan Bank Board, which regulates the nation’s S&Ls.;
Citadel’s common stock, meanwhile, did not trade Wednesday or Thursday after closing Tuesday at $37.375, up 12.5 cents, on the American Stock Exchange. Taylor said he did not know why there was no trading, adding that trading was not suspended by the exchange and that Citadel did not request a trading halt.
