Marine Bids to Buy Westchester Thrift in Deal That Tests Regulatory Waters
Fraust, Bart, American Banker
Marine Bids to Buy Westchester Thrift In Deal that Tests Regulatory Waters
NEW YORK -- In a deal that will further test the regulatory waters regarding bank acquisitions of thrifts, Marine Midland Corp. said Thursday it will acquire Westchester Financial Services Corp., a thrift holding company based in New Rochelle, N.Y.
In addition, the $112.6 million deal with Marine Midland may have killed a hostile takeover bid for Westchester waged since last February by Northeast Savings, Hartford, Conn. The Marine agreement is worth $53 in cash per share, representing 2.5 times Westchester's equity capital.
Northeast said Thursday that in light of the agreement with Marine, it is withdrawing its proposal to negotiate a merger with Westchester, whose board rejected the $4i-a-share bid from Northeast on Wednesday night.
However, the Hartford thrift said its $41-a-share tender offer for Westchester shares will remain outstanding pending further developments.
If the transaction is not completed in six months, the price will be adjusted upward in accordance with the six-month Treasury bill rate. Marine also has been issued an option to acquire up to 24.9% of Westchester's common shares at $42 per share. Options and warrants are included in merger agreements to deter hostile or rival bids.
The Marine-Westchester deal is the second significant bank-thrift combination announced in recent days. Earlier, Barnett Banks of Florida Inc., Jacksonville, said it would acquire Home Federal Bank of Florida, St. Petersburg.
"Barnett and Marine Midland are on the cutting edge of the possible," said one New York attorney who specializes in thrift law. "Neither deal is a layup. They ought to be able to do this, but there is some uncertainty."
In both cases, the thrifts will first be converted into commercial banks, so the deals will not technically be bank acquisitions of thrifts. In addition, Westchester Financial and Home Federal of Florida will switch their deposit insurance coverage from the Federal Savings and Loan Insurance Corp. to the Federal Deposit Insurance Corp.
No Problem, Says Thrift's Attorney
Thomas Vartanian, a thrift attorney representing Westchester Financial, does not see the Marine-Westchester deal as deviating from previous policy. "As long as the bank does not end up owning a thrift charter, there is no problem," said Mr. Vartanian, a former general counsel to the Federal Home Loan Bank Board.
He added that a similar acquisition was approved recently by federal bank and thrift regulators when they permitted Bank of New England Corp. to acquire Old Colony Bank, a Providence, R.I., thrift that was a member of the Federal Home Loan Bank system.
However, regulators have stated that the Old Colony deal did not set a precedent because Old Colony was a weak instituion. Both Westchester Financial and Home Federal of Florida are healthy institutions. …