Southwest Bancorp Rejects Two Takeover Bids
Southwest Bancorp of Vista, the parent of Southwest Bank, Thursday rejected takeover bids from Wells Fargo and Security Pacific.
Southwest President Frank Mercardante said both of the big banking companies viewed an acquisition of Southwest, with $375 million in assets and 14 branch offices, as an attractive way to expand their presence in fast-growing San Diego County.
However, he added, Southwest’s board turned the bids down “after an in-depth analysis of this company’s present-day market value showed that neither offer was adequate.”
Officials at the three banks declined to disclose details of the two bids. Southwest stock, which is traded on the American Stock Exchange, closed up 12.5 cents Thursday at a new yearly high of $3.875 a share. More than 12,000 shares traded hands. Southwest reported a book value of $2.42 a share on Sept. 30.
Los Angeles-based Security Pacific, which has about 50 of its 560 branch offices in San Diego County, made its bid late Wednesday.
“We were asked to come down by (Southwest’s) financial adviser and take a look at Southwest,” Mary Trigg, a Security Pacific spokeswoman, said. “We submitted an offer on Wednesday that their board declined to accept on Thursday.”
Wells Fargo, with 18 branches in San Diego County, made its surprise bid for Southwest on Dec. 6. The San Francisco-based bank has been expanding its presence in Southern California through acquisitions.
Spokeswomen for both Wells Fargo and Security Pacific would not say whether new bids would be submitted to Southwest’s board.
“I would guess that Southwest is going to try and get Wells and Security Pacific to bid against each other,” said Irving Katz, director of research for Thomas Green/San Diego Securities.
“When their stock closed up, I figured that there would be a positive announcement that a deal would be made,” Katz said.
Southwest’s board will meet Jan. 26 to “review each of our various strategic alternatives,” Mercardante said. He added that Southwest rejected the two bids after they were reviewed by the New York investment banking firm of Shearson Lehman Hutton.
Security Pacific is California’s second-largest bank, with $78 billion in assets and 560 branches. Wells Fargo, with $45 billion in assets and 450 branches, is the state’s third-largest bank.
Wells Fargo bought Crocker National Bank for $1.07 billion in 1986. On June 1, Wells Fargo completed its $125.7-million acquisition of Barclay’s Bank of California.
