Magazine article American Banker

Security Pacific Sought White Knight; SEC Filing Says L.A. Company Saw Future as Bleak

Magazine article American Banker

Security Pacific Sought White Knight; SEC Filing Says L.A. Company Saw Future as Bleak

Article excerpt

Security Pacific Sought White Knight

SAN FRANCISCO - Security Pacific Corp. agreed to merge with BankAmerica Corp. because Security decided it faced a bleak future as an independent, according to a merger document filed last week with the Securities and Exchange Commission.

The S-4 proxy statement paints a picture far different from the merger of equals portrayed in public statements. It shows that, as its balance sheet quality eroded, a weakened Security Pacific sought shelter in the arms of its biggest rival.

At the Aug. 11 meeting where the merger was approved, Security Pacific directors noted the company's difficult prospects in a slumping economy.

Key Business Lines Threatened

The board concluded that the Los Angeles company "would face continuing issues with respect to maintaining its capital at current levels and providing for growth," the proxy said. "These issues might force [Security Pacific] to sell strategically important businesses or assets, and might threaten to erode [the company's] competitive position."

By contrast, BankAmerica directors approved the merger only after assuring themselves that the San Francisco company would have the upper hand.

The board noted that BankAmerica shareholders would have 66% of the common stock of the combined company, BankAmerica chief executive Richard M. Rosenberg would keep the top job, and BankAmerica would have six of 10 representatives on the new managing committee.

The proxy reveals that Mr. Rosenberg proposed a possible merger to Security Pacific chairman and chief executive Robert H. Smith in January, soon after The Wall Street Journal reported aborted merger talks between Security Pacific and San Francisco-based Wells Fargo & Co., parent of California's third-largest bank.

The two CEOs were joined by other senior officers, and the structure of a merger agreement was outlined. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.