Chemical Banking Corp. will be spending $40 million more to buy the Margaretten Financial Corp. than was first reported.
The $330 million price reported by American Banker and in other news reports was only the cost of Margaretten's 13.2 million common shares.
It does not take into account some $40 million that is being offered for 1.6 million outstanding shares of 8.25% cumulative preferred stock, series A.
'A Good Deal'
If all common and preferred stock is tendered, the total price will be a little over $372 million.
"It looked like a good deal for Margaretten at $330 million," said Milt Walters, an investment banker at Tri-River Capital. "It looks even better today."
Chemical does not need to buy the preferred stock to control the company. But an additional $40 million of investor capital is of little use to the banking giant.
"Like most commercial banks, they have more capital than they know what to do with," said a source close to the deal.