Golden State Shareholders OK Takeover
Golden State Bancorp Inc. shareholders Thursday backed Citigroup Inc.’s planned $4.9-billion takeover of the second-largest U.S. thrift, which would almost double the number of U.S. branches of the world’s largest financial services company.
The San Francisco-based company’s shareholders voted 87.4% in favor of the purchase. Voting against were 0.6%, and the remainder abstained, Golden State said. Ronald Perelman, the largest Golden State shareholder, with about a 31% stake, was among those backing Citigroup.
Chairman Gerald J. Ford defended the sale after Citigroup stock dropped 20% since the takeover was announced May 21. The share decline cut the value of the deal from an initial $5.8 billion.
“I still think this is a good deal,” Ford told shareholders. “All shareholders are disappointed in market conditions generally. We may have a higher premium today than were we traded independent of this agreement.”
Shares of Golden State, parent of California Federal Bank, rose 40 cents to $35.67 on the New York Stock Exchange. Citigroup shares on the NYSE climbed 83 cents to $35.18, leading the 24-member Philadelphia KBW index of large U.S. banks and thrifts.
The purchase would add 352 branches, 8,800 employees and $25 billion in deposits to Citigroup’s 424-branch network in the U.S., boosting the bank’s domestic market share to 4.2% from 3.5%.
Citigroup also would gain 500 automated teller machines and a home lending operation that made $26 billion in mortgages in 2001 while servicing $89 billion in home loans for other lenders.
The bank’s share of deposits in California would grow to 5.8% from 1.3%, ranking Citigroup behind Bank of America Corp., Wells Fargo & Co. and Washington Mutual Inc., which have a combined 48% of the state’s deposits. California’s banks have $492 billion of deposits, more than any other state in the U.S.
The two banks expect to complete the deal by Sept. 30, pending approval from federal regulators.
Some shareholders challenged the transaction before the vote took place at a San Francisco Hyatt Regency hotel, where half the 84 seats set up for Golden State shareholders were vacant.
“It’s one of the worst deals I’ve seen,” said Charles Lutz, a shareholder from Lafayette, Calif. “It’s basically $5 less than when the deal was announced.”
Golden State shareholder V.N. Vukasia said he is confident Citigroup shares would rise.
“I hold all my shares for the long term,” she said.
Investors holding 64.2% of the San Francisco-based thrift chose to receive Citigroup stock rather than cash in the transaction, including Perelman, chairman of Revlon Inc.
The demand for stock exceeded a cap Citigroup had set, meaning that investors would get a combination of shares and cash, or 0.821 of a Citigroup common share and $7.47 in cash for each Golden State share, the companies said.
