Magazine article American Banker

National City Draws Fire for Flip-Flop on Buyback after First of America Deal

Magazine article American Banker

National City Draws Fire for Flip-Flop on Buyback after First of America Deal

Article excerpt

A Wall Street analyst is angry that National City Corp. has canceled a share buyback plan announced last month.

National City had said it would buy back 10 million shares of its stock, but rescinded the plan after it agreed to purchase First of America Bank Corp. Under Securities and Exchange Commission rules, National City, which hopes to account for the acquisition as a "pooling of interest," has to stop any stock repurchase.

Michael Mayo of Credit Suisse First Boston calls the on-again, off-again buyback "one of the most egregious acts of the year."

Mr. Mayo said that if National City knew it was going to make a large acquisition, it should never have announced a buyback plan. Some investors, he said, bought National City's stock on the basis of that announcement.

"Clearly there's a perception the buyback occurred during the negotiations (for First of America), which if true doesn't seem like an appropriate action," Mr. Mayo said.

Thomas Richlovsky, National City's treasurer, called Mr. Mayo's assertions "a little melodramatic."

Certainly, National City took into consideration that it might have to rescind the repurchase plan, he said. But when the plan was announced, he said, the company did not know how fast the First of America deal would come together.

National City's board approved the buyback at a meeting on Monday, Nov. 24, three days after it heard that First of America would take bids. On Wednesday, Nov. …

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