Turning up the heat in his battle to regain control of Compass Bancshares, former chairman Harry B. Brock Jr. has disclosed that First Union Corp. made a confidential offer last fall for the $9.1 billion-asset company.
The disclosure, in a filing with the Securities and Exchange Commission, is part of Mr. Brock's campaign to replace three of Compass' 12 board members with his own nominees through a proxy challenge - a move he believes will give him a six-vote majority.
If he wins control of the board, Mr. Brock, who founded the Birmingham, Ala., company and is still a director, has said he will solicit takeover offers similar to the one First Union made in October.
He said the bid was $30.71 a share, representing a 35% premium over Compass' stock price at the time. Compass' stock has been trading in the $27 a share range since Jan. 27, when Mr. Brock made his campaign public.
At the time, Mr. Brock said the Compass board had already rejected an offer, but he declined to disclose from whom. Press reports soon pointed toward Charlotte, N.C.-based First Union, the Southeast's second-largest bank. Now Mr. Brock has testified to what appears to be an actual First Union offer.
Titled "Remarks by Edward E. Crutchfield Jr., chairman and chief executive officer, First Union Corp.," and "Presentation to Compass Bancshares Inc. Board of Directors, October 1994," the document states First Union's offer to exchange 0.70 share of its stock for each share of Compass.
Such a deal would have been worth $1.14 billion, or $30.71 a share, representing a 35% premium above the Oct. 17 closing price. Mr. Crutchfield goes further and calculates the total appreciation for Compass shareholders at 125% by 1998, including dividend growth of 30%.
Mr. Brock said he received this offer during a telephone discussion with Mr. Crutchfield and then communicated it to Compass directors at their Oct. 17 meeting. Mr. Brock said the board's voting down the proposal prompted his decision to launch the proxy challenge.
"There was never a vote, because there was no offer to vote on," said Compass spokeswoman Ellen Laden. "We've got a director here who went out on his own and tried to sell a bank that was not his to sell."
Ms. Laden said Compass management and directors didn't receive a written copy of the First Union proposal until Oct. 19, when Mr. Brock had copies delivered by courier.
"We don't have any idea how Mr. Brock presented himself to First Union," the spokeswoman added.
Compass directors voted last month to keep the bank independent, on the recommendation of their investment banking firm, CS First Boston, Ms. Laden said.
First Union declined to comment.
Its apparent interest in Compass comes as no great surprise to analysts. Dean Witter's Anthony R. Davis, one of the few to follow both First Union and Compass, said Compass would enhance First Union's presence in northern Florida while providing a strong entree into Alabama.