Magazine article American Banker

Ford Financial Seeks Majority Stake in Mechanics Bank in California

Magazine article American Banker

Ford Financial Seeks Majority Stake in Mechanics Bank in California

Article excerpt

Byline: Robert Barba

Texas billionaire Gerald J. Ford, who has struck gold in California banking a few times, is back for more.

Ford's private equity firm, Ford Financial, has commenced a tender offer for up to 65% of the $3 billion-asset Mechanics Bank in Walnut Creek, Calif. Ford is offering shareholders $26,832 a share in cash, which represents 160% of the bank's book value.

The offer to Mechanics' shareholders is the first deployment of funds from the $755 million Ford Financial Fund II. The funds were raised in mid-2013.

At least 51% of the shareholders must accept the tender offer for Ford to complete the transaction. Based on the bank's 19,380 shares outstanding reported in its 2013 annual report, Ford would be paying out $265.2 million to $338 million. The private equity fund said in a press release that it is structured and prepared to become a bank holding company.

Tender offers are often associated with hostile takeovers, but Mechanics said in a press release that its board had approved the transaction.

"The board strongly believes this transaction represents exceptional value for our shareholders and is in the best interest of our clients and employees," Christa Steele, Mechanics' president and chief executive, said in a press release. "We take great comfort in knowing that Ford Financial has an intimate understanding of the banking business, and is fully committed to upholding our longstanding culture of excellence."

Mechanics' stock is thinly traded, and the company may have been looking for a way to give its shareholders liquidity -- or at least access to it. The bank said in a press release that the offer gave shareholders the ability "to make their own investment decision regarding the offer in light of their unique investment objectives."

"We have used 2014 as a year of change in anticipation of a liquidity event to best prepare Mechanics Bank for significant planned growth in 2015 and beyond," Steele said in the press release. …

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