St. Paul Bancorp shares climbed nearly 5% in a down market Wednesday after a major stockholder stepped up his campaign to force the Chicago thrift company to sell.
Harry V. Keefe Jr., who owns a million shares of St. Paul, said he had requested a list of shareholders from the company, a preliminary step to a proxy fight, and renewed his criticism of management.
"Having reviewed St. Paul's very disappointing fourth-quarter results, I now believe more strongly than ever that St. Paul should be sold or merged," said Mr. Keefe in a statement.
"Since management has expressed no interest in actively exploring this means of maximizing shareholder value, I remain totally committed to my shareholder proposal."
Mr. Keefe's New York investment firm, Keefe Managers Inc., said it retained Beacon Hill Partners Inc., a proxy solicitation firm, to help it communicate with St. Paul shareholders.
St. Paul's share price, which lagged after Mr. Keefe's efforts appeared to be sidetracked by a series of key departures from his firm, jumped 87.5 cents to $21.5625 while most other bank and financial stocks were weak.
Mr. Keefe began pushing the $6 billion-asset St. Paul's to sell last year. He outlined his case in a letter to shareholders on Jan. 11.
"Through sale of the company, we eliminate the downside risk that St. Paul-with its stagnant operating earnings and meager return on equity-will continue to flounder in a world of increasing competition," Mr. Keefe asserted.
Other observers tend to agree. "It would have been in the best interest of shareholders if they had sold last year," said Stephen Skiba, a bank analyst with ABN Amro.
Robert Williams, director of investor relations at St. Paul, said the company would release the shareholder list to Mr. Keefe, who heads one of the largest bank hedge funds.
Mr. Keefe's efforts could come to a head at St. Paul's annual meeting in May.
Meanwhile, he has faced some distractions.
Last month his senior investment team-including the president, Matthew Byrnes, and senior analysts Felice Gelman and Marge Demarrais-all resigned.
St. Paul would not comment on Mr. Keefe's renewed interest in the company or the movement of its stock price.
But at a Salomon Smith Barney investment meeting in January, Joseph C. Scully, St. Paul's chairman, said: "Independence for the sake of independence is not a business strategy and it is not ours."
Mr. Scully said he was "well aware of the competitive dynamics in the marketplace and rapid consolidation that is taking place in this industry."
He added, "If we were to receive an offer, I would fulfill our fiduciary duties and deliver it to the board of directors for serious consideration."
Mr. Williams said Wednesday that "Mr. Scully, our management, and our board of directors still believe that."
