Magazine article American Banker

Fifth Third Says Hostile Tender Offer Is Possible

Magazine article American Banker

Fifth Third Says Hostile Tender Offer Is Possible

Article excerpt

Star Banc's Shares Jump 29% After Bid

Shares of Star Bank Corp. soared 29% Monday, as Fifth Third Bancorp declined to rule out a hostile tender offer for its crosstown Cincinnati rival.

"We have not ruled out any options," P. Michael Brumm, Fifth Third's chief financial officer, said in a telephone interview.

This was the first confirmation from Fifth Third that a hostile bid was not out of the question. No major hostile takeover effort has been mounted in banking since Bank of New York Co.'s successful bid for Irving Bank Corp. in 1988.

Hoping to Open Talks

However, Mr. Brumm said Fifth Third hoped a tender offer "would not be necessary and that we can sit down to talk about a plan that could be excellent for everyone."

Last week, Star's board rejected a bid of about $1.1 billion in stock from Fifth Third, vowing to remain independent and saying the offer was inadequate.

On Wall Street, few seemed to doubt that Fifth Third would eventually snare its quarry. Star's share price was ahead $8.375 in late trading Monday, to $36.875, and Fifth Third's was down $2.50, to $44.25. Fifth Third said its offer amounted to $38 to $40 per Star share.

"It looks like a terrific deal for shareholders of both these companies," said Anthony J. Polini of A.G. Edwards & Sons, St. Louis. "The price offered is at the peak of acquisition prices over the past 10 years, and the combined company would be a powerhouse."

Other analysts agreed that the offer, equal to nearly 2.25 times Star's book value and 18 times its earnings, cannot be refused without stirring the wrath of Star shareholders.

"This offer is so compelling, it is hard to imagine what could justify turning it down," said Fred A. Cummings of McDonald & Co., Cleveland. "I'm sure shareholders are being heard from."

At the same time, Fifth Third can do a deal at this price, or even somewhat higher, without a threat of dilution to its shareholders. …

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