An unsolicited bid for Sandwich (Mass.) Bancorp has touched off a fierce fight for the 112-year-old institution.

In one corner stands CompassBank of New Bedford, Mass., which on Feb. 2 announced plans to acquire Sandwich for $110 million in cash, or $53 per share. In the other is Cape Cod Bank and Trust Co., which swooped in Tuesday and offered Sandwich shareholders $125 million in stock. Hyannis- based Cape Cod, with $981 million of assets, has offered to pay up to 20% of the purchase price in cash.

CompassBank retaliated Wednesday, announcing plans to ask the Federal Reserve Board for permission to acquire up to 24.9% of Sandwich's stock. President and chief executive officer Kevin G. Champagne said the move would assure CompassBank more control of $519 million-asset Sandwich's future.

CompassBank, with $1.1 billion of assets, owns 4.9% of Sandwich's stock.

"This puts us in a position where any other acquirer would have to deal with us," Mr. Champagne said.

Cape Cod Bank and Trust president Stephen B. Lawson would not comment except to say, "At this point, it's up to the board of directors to take the next step."

Mr. Champagne warned Sandwich shareholders against accepting Cape Cod's $60-per-share offer, which unlike CompassBank's proposal, would be paid mainly in stock.

"We intend to go forward at $53, because we feel that $53 in cash is still a better deal than their $60," Mr. Champagne said. "At that price, we feel that would be significantly dilutive to earnings."

Sandwich officials did not return telephone calls seeking comment. In a statement, president and chief executive officer Frederic Legate said the bank's board would consider Cape Cod's offer.

News of the counteroffer, released late Tuesday, sent Sandwich's stock soaring. In Nasdaq trading Wednesday, shares rose $5.125, closing at a record $55. At midday Thursday, the stock was trading at $54.25.

Cape Cod, with assets of $981 million, saw its stock fall 50 cents Wednesday, to $41. By midday Thursday, it had dropped to $40.50.

CompassBank's offer works out to about 2.6 times Sandwich's book value. The mutual thrift plans to finance the purchase through its holding company, 1855 Bancorp, by selling 49% of its stock in a public offering.

Cape Cod's offer is valued at 2.9 times book-an offer one investment banker said may be too good to refuse.

"I thought Compass made a good offer, but this is an even better deal," said Bernard J. Doherty, senior vice president at Josephthal & Co. By receiving stock instead of cash, he said, Sandwich shareholders would not have to pay taxes on the gains until the stock is sold.

Cape Cod's higher offer illustrates just how far the resort area's economy-and the banks that serve it-has come since the mid-1990s.

"Four years ago I wouldn't have touched Cape Cod Bank or Sandwich Bank, because every other house on Cape Cod was for sale," Mr. Doherty said. "Now they're both riding a wave."

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