Western Bank last week called off its proposed long-distance acquisition of Pacific Bank, concluding a chapter in an unusual community banking story.
The $718 million-asset Western in January agreed to acquire Pacific, a $320 million-asset trade finance company headquartered in San Francisco. The proposed $54 million price equaled 120% of Pacific's book value.
In explaining last week's about-face by Western, Georges S. St. Laurent, the Coos Bay, Ore., bank's chief executive, said he had come to realize that "the integration of the two banks could not be easily achieved."
Pacific's chief executive, Ned Deans, said in a prepared statement that he is negotiating with several other potential acquirers and intends to sell his institution as soon as possible.
Pacific's stock fell only 75 cents on Friday, the day after the cancellation announcement. The issue closed Monday at $18, up $1.
Western's Mr. St. Laurent owned 9.9% of Pacific's stock at the end of 1994, according to Securities and Exchange Commission filings.
Depending on the price at which he purchased his stake, observers said, Mr. St. Laurent apparently stood to gain from the proposed $20 per share Pacific acquisition. Indeed, the target's stock jumped 50% to $18 per share the day of the announcement.
Mr. St. Laurent has not responded to written and telephone inquiries. In a prepared statement, Mr. St. Laurent said the proposed merger would enhance service to customers doing business in both states, while providing Western Bank with a California expansion base.
Some West Coast investment bankers expressed doubts, however, saying there were few obvious synergies between a rural community bank and an international trade finance company.
A further point of uncertainty about the transaction was its proposed price. Pacific Bank has been lifting itself out of asset quality problems, and some observers asserted that the property should fetch more than a proposed 1.2 times book value.
Observers speculated Pacific may have accepted the seemingly low price in order to evade a potential hostile acquisition led by one of its shareholders, Cheong Swee Kheng of Singapore. In February she boosted her stake to more than 25%. Her common-law husband earlier expressed an interest in acquiring the bank.
The raw speculation in some circles was that Mr. St. Laurent was more intent on putting Pacific in play than acquiring it.
However, not one critic has offered any concrete information about the executive's private motivations. To date, there is no evidence that insiders sold shares between the time of the deal's announcement and Thursday's termination.
