Magazine article American Banker

Michigan National Fends off Suitors; Comerica, NBD Proposals May Just Be the Start of a Bidding War

Magazine article American Banker

Michigan National Fends off Suitors; Comerica, NBD Proposals May Just Be the Start of a Bidding War

Article excerpt

DETROIT -- Just whom Michigan National Corp. appeared to have overcome its energy loan problems and reshuffled senior management, the takeover sharks began circling.

A merger offer from rival Comerica Inc. showed up at the Bloomfield Hills headquarters arriving, coincidentally, on the same day -- Jan. 17 -- that former Federal National Mortgage Association president Robert J. Mylod was elected Michigan National's chairman and chief executive officer.

NBD Bancorp not to be outdone, also expressed an interest in some kind of "business transaction." Michigan National has ignored NBD and last week turned down Comerica but the latest suitor is undaunted. A Comerica spokesman said the company "will remain active" in its pursuit of Michigan National.

"It was like someone who has just recovered from major surgery learning he has cancer," said one Michigan National insider. Some of Michigan National's directors and senior managers privately took offense to the timing of Comercia's offer.

In his first public address, part of Michigan National's annual economic outlook meeting, Mr. Mylod said emphatically that despite the merger overtures, the management and directors "intend to keep this corporation independent."

"Just because we receive an offer doesn't mean we have to accept it," Mr. Mylod told about 2,000 Detroit area bankers and businessmen. Mr. Mylod fills the top positions which have been vacant since former chairman Stanford C. Stoddard was forced to resign last summer.

Comercia proposed a tax-free swap of common stock at less than Michigan National's book value of about $30 a share, according to sources close to Michigan National. Neither institution will confirm details of the offer. However, those sources said Michigan National senior executives and directors believe the company's stock may fetch a higher price from an out-of-state or foreign bank sometime in the future. Michigan National would also consider an offer from an out-of-state or foreign bank more attractive because they would be more likely to leave operations intact. A Michigan state bank would have to reduce or consolidate operations to avoid duplication and to satisfy federal anti-trust laws.

Antitakeover Move

In a related action designed to thwart a hostile takeover attempt, the Michigan National board has invoked a new state law which requires an 80% super majority shareholder vote to approve a merger. To be covered by the law, a company's board must first pass a resolution subjecting itself to the regulation.

Comerica, an aggressive and expansion-minded banking company under the leadership of Donald R. Mandich, is miffed at being characterized as a predator in its effort to merge with Michigan National.

to the contrary, Mr. Mandich said, sue the merger by several Michigan National directors and senior managers, including its recently retired president, Edwin B. Jones, in meetings dating back to July.

"the offer was agreed as being very attractive to both the company and their shareholders," said Mr. Mandich, the company's chairman and chief executive officer, in an interview prior to Michigan National's rejection. "We have talked to some of their very large shreholders who consider it attractive. …

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