Intensifying their effort to gain control of Compass Bancshares, dissident shareholders have sent a "fight letter" and preliminary proxy statement to the bank company's investors.
Meanwhile, Compass stock has traded slightly higher in the wake of reports last week that the bank's management had considered an in-market deal with another Alabama bank, Birmingham-based Regions Financial Corp.
The dissidents, led by founder and current director Harry B. Brock Jr., filed with the Securities and Exchange Commission last Friday a letter that is being sent to 2,000 of the bank's largest shareholders. They are believed to control more than three-fourths of the 37 million shares of common stock.
In the so-called fight letter, Mr. Brock asks investors to support his group's nominees for three seats on the 12-person Compass board. Those nominees, he writes, "are committed to seeking out potential merger partners for Compass that would generate values for Compass shareholders of not less than $30 per share."
Compass closed Tuesday at $27.50 a share.
Mr. Brock had previously made public an offer of $30.70 that Charlotte, N.C.-based First Union Corp. presented to Compass' board last October. The board's failure to consider the First Union offer prompted Mr. Brock to try to gain control of the board through a proxy battle.
Mr. Brock and his group claim voting control of 8.5% of Compass' shares.
In a telephone interview Tuesday, Mr. Brock said he sent out the fight letter and preliminary proxy so that he could begin calling Compass shareholders to enlist their support. Until the Compass board designates a date for its next annual meeting, SEC rules prohibit Mr. Brock from sending out a definitive proxy statement.
The Compass board was scheduled to meet late Wednesday.
Mr. Brock said he planned to push, during that meeting, for the appointment of "an independent fiduciary" to count the ballots in the upcoming election. He said he is particularly concerned about the privacy rights of Compass employees, who control 7.2% of the shares through their Employee Stock Ownership Plan.
A Compass spokesperson said Tuesday that the bank has already agreed to appoint such a fiduciary.
Meanwhile, Compass stock has been trading slightly higher in the wake of an American Banker report last Thursday that Compass management had held "exploratory discussions" with one of the other major Alabama banks about an in-market merger.
The report did not specify the other bank. But American Banker has subsequently learned that it was Regions, which has $12.8 billion of assets. Sources close to the situation said Regions and Compass, which has $9.1 billion of assets, discussed a possible deal late last year when it became clear Mr. Brock was trying to sell the company.
The sources said Regions, not wishing to get entangled in a public dispute, broke off the talks when Mr. Brock announced his proxy challenge Jan. 27.
Regions declined to comment.
Compass issued a statement Tuesday saying there were no "ongoing talks with any company" about an in-market merger. But the bank added that its recently concluded strategic review had looked at all options, "including sale of the bank, a merger of equals," or remaining independent.