Bank of New York Drops Mellon Bid

Bank of New York withdrew its $21.8-billion buyout bid for Mellon Bank Corp., citing Mellon management’s refusal to discuss the offer. Mellon said its board had unanimously rejected a meeting. Bank of New York had made an unsolicited offer to acquire the Pittsburgh-based banking company for stock April 22, saying a combined company would be better able to compete in the rapidly consolidating financial services industry. Mellon rejected the offer. Mellon Chairman Frank Cahouet told Bloomberg News that the bank can remain independent for the next five years, even as other banks combine in a record-breaking effort to achieve scale. Withdrawal of the Bank of New York offer puts considerable pressure on Mellon to take steps to create more value for its shareholders. The offer of 1.4 shares of Bank of New York stock for each Mellon share was originally valued at about $23 billion, or $90 a share, 28% more than what Mellon shares were trading for at the time. At Tuesday’s closing price of $60 a share for Bank of New York stock, the offer was worth $21.8 billion, or $84 a share to Mellon shareholders. Mellon shares fell $2.25 to close at $67.75 on the New York Stock Exchange.