A Chicago-area merger deal is still on, the seller insists-and it is not cutting its price.

John L. Garlanger, chief financial officer of Dolton, Ill.-based Calumet Bancorp., said last week that his company was "proceeding" with its sale to FBOP Corp. of Oak Park, Ill.

The two parties had agreed in September that $3.3 billion-asset FBOP would pay $112 million in cash for $479 million-asset Calumet. But the deal seemed dead in November after FBOP's chairman, Michael E. Kelly, asked Calumet to drop the price by $4 million.

Mr. Kelly said the discount was necessary because Calumet wrote down $4.3 million in the third quarter to cover losses associated with some mortgage servicing rights it owned, according to a proxy statement that Calumet issued last week.

Calumet's board refused to reduce price by any more than $1.5 million, the proxy said.

Representatives from both sides met in December but reached no agreement, Calumet said in the proxy. FBOP had asserted at the meeting that it would retain its right to acquire Calumet, the statement said. However, FBOP did not provide "reasonable assurances" that it would go through with the deal, the statement said.

Calumet says it will ask shareholders to vote next month on September's $112 million price, not the lower figures the two parties have discussed.

The September agreement provided for FBOP to walk away from the deal if Calumet suffered a "material adverse change," but Calumet argues that the writedown does not qualify.

Stephen Skiba, a bank analyst at ABN Amro in Chicago who covers Calumet, said he thinks that Calumet shareholders will accept the September offer- and that FBOP will ultimately honor it. Failure to do so could damage FBOP's reputation as an acquirer, he said.

"It's a game of chicken," Mr. Skiba said. "I think (FBOP's) Kelly is a good negotiator and he's playing this for all it's worth."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.