Bank of N.Y. Says It Won't Take No for An Answer

Bank of New York Co. chairman Thomas A. Renyi turned up the heat on Mellon Bank Corp., vowing his company would not back down from its unsolicited $24 billion acquisition offer.

Speaking Tuesday at Bank of New York's annual meeting, Mr. Renyi said, "We're looking at this as a transaction that is going to get done. This will take a matter of weeks rather than months."

Mr. Renyi said he has held individual meetings with the holders of 35% of Mellon's outstanding shares. "Ninety-nine percent have voiced a positive view and have said this is a deal that needs to get done," he said.

The bank described those surveyed as "65 of Mellon's largest institutional shareholders," owning 75 million shares. Mellon had 260 million outstanding at the end of March.

Three-quarters of the group-representing 55 million of the Pittsburgh bank's shares-have contacted Mellon's board "to express their opinion" that the deal should go forward, Mr. Renyi said.

Meanwhile, none of Mellon's board members have contacted Bank of New York, the executive said. At a special meeting to discuss the proposal April 26, Mellon's board rejected the unsolicited offer. Mellon declined to comment further on Tuesday.

This standoff began three weeks ago when Bank of New York's top executives launched the unsolicited bid. It was quickly rejected by Mellon's chairman, Frank V. Cahouet, and a statement followed that $47.4 billion-asset Mellon was not for sale.

Mr. Renyi insisted the proposal is in the interest of shareholders and presents "unique opportunities."

Mr. Renyi explained Tuesday that he has met with some large Mellon shareholders and continues to stay in touch with them in an "ongoing dialogue."

Bank of New York, which has $59.4 billion of assets, is gambling that Mellon shareholders will put enough pressure on the board of directors to force it into a transaction.

"We are hoping that the cumulative weight of contact will convince them that we should talk," Mr. Renyi said.

Securities attorneys, who would speak only on condition of anonymity, said Bank of New York could be hoping that the shareholders it has contacted will turn activist. Many banks have provisions in their corporate bylaws that allow a given percentage of shareholders to force a board to meet and vote on an issue, the attorneys said.

"This critical mass of shareholder approval simply cannot now be ignored," Mr. Renyi said. "We continue to receive unsolicited calls from Mellon's individual and institutional shareholders alike, asking how they can move Mellon's management to complete this merger. We expect the momentum will continue."

But analysts remained skeptical about Bank of New York's chances. Mellon's directors are not disappointed with the bank's management, said Henry C. Dickson of Salomon Smith Barney.

Mr. Renyi, presiding at his first annual meeting since taking the Bank of New York helm in February, said he would not discuss the possibility of backing away from the bid.

But he also repeated his commitment not to launch a proxy contest.

He would not give a time line for completing the deal, saying his bank's strategy "needed to have the flexibility to evolve." But he resolutely dismissed the idea of finding another merger partner. "No other bank has the mix of business" that Mellon has, Mr. Renyi said.

Bank of New York's revenues are projected to rise 16% this year, fueled by fee-income sources like securities processing. That momentum indicates the business plan is "successful and sustainable" on its own, Mr. Renyi said.

"We do not need to participate necessarily in the consolidation of the industry," Mr. Renyi added. But he views combining with Mellon as a unique opportunity.

"Mellon represented a quantum leap for us in terms of strategy. But we can continue to do exactly what we have been doing."

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