What started out as just another merger announcement between two small mutual thrifts has erupted into a rather unusual bidding war in Massachusetts.
Westborough Bancorp has received two higher offers from other suitors since announcing Nov. 14 that it had a deal to sell itself to Assabet Valley Bancorp in Hudson for $35 a share.
The $300 million-asset Westborough, a mutual holding company, already has rejected one offer of $38.50 from an unnamed buyer, and last week it was notified that one of its own investors had offered to buy the publicly held shares at $40 each.
The investor, Marc J. Bistricer of Toronto, wrote in a Feb. 28 letter to Westborough that he believes the $20.6 million cash deal with Assabet is below market value. Mr. Bistricer is offering $23.9 million in cash.
Joe MacDonough, Westborough's president and chief executive officer, said in an interview Monday that he forwarded Mr. Bistricer's letter to the board and asked the company's financial and legal advisers for their recommendations. "We're doing research, and as soon as we can put together enough information, we will respond."
Mr. MacDonough said that he is unfamiliar with Mr. Bistricer, who wrote in his letter that he and a group of investors he represents own 9.9% of the company's publicly held stock.
(The mutual holding company owns about 64% of the stock, and the remaining shares are publicly held. It is only those shares that Assabet, or any other acquirer, would buy out.)
Westborough's shares shot up more than 11% immediately after the Assabet deal announcement, to $34.50. They spiked again last week after Mr. Bistricer made his offer. Late Tuesday the stock was trading at $36.21.
Several investment bankers said that it is rare for competing bids to come along when a deal is under way, and that it is virtually unheard of for a shareholder in a selling bank to decide the price is so low that he would offer to buy it instead.
Mr. Bistricer is affiliated with Talisker Corp., a global real estate development firm based in Canada. But a spokesman for Mr. Bistricer, Keith Zakheim, said a group of Westborough investors is making the buyout bid — not a specific entity. "This is not some whimsical offer," he said. "They have very deep pockets."
The offer of $40 a share is contingent on Westborough's agreeing to give Mr. Bistricer a majority of board seats, Mr. Zakheim said.
The group has enough cash on hand to close the deal immediately and is willing to put that cash into a three-month certificate of deposit during the due diligence and regulatory approval process to assure Westborough of payment, the spokesman said.
"They have cash. This is not subject to financing at all," he said. "They are dead serious about taking over the bank at $40 a share. They think the bank has a lot more value than is reflected in the offer of $35 a share."
The investor group is not planning to conduct a second-step stock offering to take Westborough fully public, nor would the group bring in its own management team, according to the spokesman.
"Their plan is to keep the status quo of the bank with the current management," he said.
Westborough's deal with Assabet is set to close in the spring. Assabet's $655 million-asset Hudson Savings Bank, which has five branches, and Westborough's Westborough Bank, which has four branches, would be combined under a new name.
Mark O'Connell, the president and CEO of Hudson Savings, said he would be disappointed if those plans fell through.
"I guess Westborough's board will have to determine the validity of the other offer," he said. "We still feel our offer is superior. We feel the merger of our two institutions would be a great thing for our community." In a Securities and Exchange Commission filing last month, Westborough said it had rejected a $23 million unsolicited bid in December, because the offer was not "superior" to Assabet's. In rejecting that bid, Westborough cited financing uncertainty, the delay and uncertainty of obtaining regulatory approval, and the time needed to undertake due diligence and negotiate an agreement, among other reasons.
Westborough did not identify that buyer. It was not Mr. Bistricer, according to his spokesman.
