Ameritrust Opens Door To Merger
Cleveland-based Ameritrust Corp. said Tuesday it is ready to talk with possible acquirers, including crosstown rival National City Corp., whose unsolicited $870 million bid has been unanswered since May.
Observers regard the move as a further sign that merger fever is taking hold of bankers.
Ameritrust has received other preliminary offers as well, according to a spokesman, but until now the board has rebuffed them. The third major Cleveland bank, Society Corp., and two well-regarded midwestern superregional banks, Banc One Corp. of Columbus, Ohio, and NBD Bancorp. of Detroit, are also said to be interested.
Investors Like the News
Investors took the board's change of heart as a good sign. Ameritrust stock jumped $2 on the news to $23.75, for a gain of 14.5% so far this week. The shares rose $1 on Monday after word of the deal between New York's Chemical Banking Corp. and Manufacturers Hanover Corp. set off merger speculation in bank stocks.
The decision to entertain bids followed the board's "extensive review" of options, according to a spokesperson. But no timetable for action was set, and the company has ruled out remaining independent.
Keeping suitors at bay enabled the Cleveland bank to put together two profitable quarters and puts it in a better position to deal with bidders, analysts said.
Last year, said Ameritrust chairman Craig R. Smith, "our financial performance and our stock price were depressed. Our alternatives were not clear. We are now a much stronger institution, and our prospects are much improved. We can look forward to the future with confidence, whether as part of a larger institution or as an independent one."
National City Upbeat
A National City spokeswoman also expressed enthusiasm. "We welcome Ameritrust's decision to open discussions and look forward to sitting down with them soon to discuss the future for our institutions," she said.
Ameritrust earned 62 cents a share in the first six months of this year, compared with a loss of 93 cents in the same period last year. For all of 1990, the company lost $96.4 million, or $2.71 a share.
Once the premier bank in Cleveland, Ameritrust has been hurt by problem loans to real estate developers and highly leveraged borrowers.
Last year, in the midst of its difficulties, Ameritrust fended off a bid from National City. On May 2, National City renewed its bid, offering 0.66 of its shares for each Ameritrust share.
Offer Gets Richer
On Tuesday, based on National City's share price of $36.75, the offer was worth $24.26 to Ameritrust shareholders, at a potential cost of $904.9 million to National City.
That is up from $23 a share, for a total cost of $870 million, at the time the offer was made 10 weeks ago, because of the rise in bank stocks.
National City stand to reap large benefits from the elimination of an in-market competitor. Cost savings of $120 million annually have been projected.
Ameritrust's largest single shareholder is Cleveland businessman George Gund 3d, who owns 6.5%. Mr. Gund, former chairman of the Cleveland Cavaliers of the National Basketball Association, could not be reached for comment.