Irving Bank Corp.'s board approved Friday a management-backed $1.48-billion merger with hostile suitor Bank of New York Co., ending one of the nation’s lengthiest and most bitter takeover battles.
The merger will nearly double Bank of New York’s size, vaulting it close to the top 10 of the nation’s largest banking companies. The two had a combined $47.8 billion in assets as of June 30.
The board vote Friday came two days after Irving Chairman Joseph A. Rice announced that he would abandon his yearlong resistance to the proposed acquisition and drop all pending lawsuits and anti-takeover defenses aimed at stopping Bank of New York.
Rice also promised to move up his retirement plans and leave after the deal was completed.
In return, Bank of New York sweetened its previous hostile offer by about $200 million by slightly increasing the stock portion of the bid and adding stock warrants.
Forced to Negotiate
Bank of New York has a tender offer, scheduled to expire Oct. 21, under way for Irving shares. As of Sept. 30, nearly 10.46 million of Irving’s 18.9 million outstanding shares had been tendered to Bank of New York, said Owen Brady, a Bank of New York spokesman.
Neither side has commented publicly on the turn of events leading to the tentative pact. But banking analysts agreed Irving was forced to negotiate in the absence of any “white knight” takeover partner and after an appeals court invalidated Irving’s anti-takeover “poison pill” defense.
The Appellate Division of New York State Supreme Court on Tuesday struck down a provision allowing all Irving shareholders--except a hostile suitor--to buy $400 worth of Irving shares for $200 if any suitor bought more than 20% of Irving stock without Irving management support. Such devices make unsolicited takeover bids prohibitively expensive.
Irving had vowed to appeal the ruling to the state’s highest court, the Court of Appeals. But some legal experts questioned whether that court would have considered the case since the Appellate Division’s decision was unanimous.
Last spring, Milan-based Banca Commerciale Italiana SpA, offered to merge with Irving as part of a major restructuring of the New York bank. But it withdrew the bid after the Federal Reserve Board ruled the Italian government agency that owned most of Banca Commerciale had to supply separate financial information.
The Fed already has given conditional approval for an Irving-Bank of New York merger.
Under its revised bid, Bank of New York, which owns 4.9% of Irving, would pay $15 in cash and 1.675 shares of its own stock for each of Irving’s common shares outstanding. It also included warrants valued at $5 toward the purchase of Bank of New York stock.