Ameritrust Stalls Answering Offer By National City
Ameritrust Corp. on Thursday deferred a decision on National City Corp.'s takeover offer, saying the board wanted to complete a review of various options, "including that of remaining independent."
Ameritrust did not specify a deadline for making a decision.
Two Overtures Ignored
Analysts speculated that the board may be considering another bid or is stalling to allow other potential acquirers to counter the proposed $870 million stock swap.
Ameritrust had ignored two overtures from National City dating back to last year. Both companies are based in Cleveland.
Other companies said to be interested in Ameritrust include Detroit-based NBD Bancorp, Society Corp. of Cleveland, and McDonald & Co.
Ameritrust's stock closed unchanged Thursday at $21.875, while shares of National City rose 75 cents to $36.50.
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National City officials were reportedly miffed by Ameritrust's decision, especially since the first takeover overtures were made last fall. "They've had plenty of time," a source close to the company said.
A spokesman for National City declined comment.
Analysts speculated that National City may decide to sweeten its offer if Ameritrust agrees to open negotiations.
Hostile Run Is Possible
A hostile run also is possible, although that would trigger a shareholder rights plan, which could increase the purchase price.
In addition, almost 30% of Ameritrust's outstanding shares are held by units of the bank itself: The Employee Stock Ownership Plan holds 13.9% of the stock, and the trust department owns 15.6%.
Ameritrust's largest individual shareholder is George Gund III, the former chairman of the Cleveland Cavaliers basketball team, who owns 6.5% of the common stock. Mr. Gund could not be reached for comment.
Board Stands Up to Pressure
Despite the increased pressure, Ameritrust's board is considered very independent-minded, and might want to see second-quarter earnings results before deciding whether to put the company on the block.
"If they [Ameritrust] show improvement, that might strengthen their negotiating position and build a case for independence," noted Elmer Meszaros, a banking analyst at Roulston & Co., Cleveland.
Nonperforming Loans
Ameritrust, the one-time Cleveland banking leader, stumbled in recent years from bad loans in commercial real estate and high-leverage borrowers.
The company lost $96.4 million last year, or $2.71 per share, and saw nonperforming loans soar 152% in the fourth quarter.
As of yearend 1990, it had over 10% of its loan portfolio in highly leveraged transactions, and 18.37% of its highly leveraged transactions were nonperforming, according to Thomson BankWatch Inc., an affiliate of American Banker.
Ameritrust is being advised by Goldman Sachs & Co., one of Wall Street's preeminent takeover defense advisers.
