Imperial Bancorp is again seeking a buyer for its stake in a high-risk consumer lending unit.
The Los Angeles banking company said late Monday that its agreement to sell its 24.3% stake in Imperial Credit Industries Inc. to Leucadia National Corp. has been terminated.
The $82 million deal, which was announced March 1, was called off because Leucadia wanted a larger stake in Imperial Credit but was unable to find another seller, said Imperial Credit chairman, president, and chief executive officer H. Wayne Snavely.
Leucadia, a New York property and casualty insurer, had agreed to buy Imperial's 8.9 million shares for $9.25 each. Leucadia officials declined to comment.
But in a prepared statement, Mr. Snavely said that Imperial Credit was not interested in selling a larger stake to Leucadia.
"Now is not the time ... to accommodate a new investor's acquisition of a controlling position in our stock at current price levels," he said.
At midday Tuesday, Imperial Credit's stock was trading at $7.1825, well below its 52-week high of $27.
The foiled transaction is a temporary setback for $6.2 billion-asset Imperial Bancorp, which has been trying to divest its stake in Imperial Credit since last summer.
Imperial Credit is a Torrance, Calif.-based finance company that specializes in consumer lending, lease financing, and asset-backed lending. It lost $73.6 million, or $1.93 per share, in 1998. As a result, Imperial Bancorp lost $10.6 million on that investment last year, compared to a gain of $11.7 million in 1997.
The banking company has another reason to unload Imperial Credit holdings. The federal Bank Holding Company Act prohibits banking companies from holding more than 20% of a company whose main businesses are not related to banking.
Imperial Bancorp had originally planned to shift its stake into a subsidiary company-Imperial Financial Group-and spin it off to the public. But those plans bombed when the stock market tumbled last summer.
Officials at Imperial Bancorp also declined to comment. In a news release, the company said it would hire an investment banker to review its options.
Mr. Snavely added that Imperial Credit, which was spun off from Imperial Bancorp in 1992, would continue to work with its former parent in disposing the shares.
Analysts said they expect other bidders to step forward but are unsure at what price. They speculated that bidders may include Imperial Credit's current institutional shareholders such as Wallace R. Weitz & Co. of Omaha and Wellington Management Co. LLP of Boston.
"If they get a lower price, that is life," said Lawrence W. Cohn, an analyst at Ryan, Beck & Co. in Livingston, N.J. "We just want to see (Imperial Credit), and its associated risks, gone."
Meanwhile, Imperial's stock is being weighed down by Imperial Credit because shareholders have concerns about the specialty finance market, said Keefe, Bruyette & Woods Inc. analyst Thomas K. Theurkauf Jr.
"It's putting a lid on the bank's" price-earnings ratio, Mr. Theurkauf said.
At midday Tuesday, shares of Imperial had traded up 4.26%, to $18.375.
