Dime Bancorp has just eight more days to get its shareholders to support a merger with Mahwah, N.J.-based Hudson United Bancorp, but already some big investors are saying the deal is probably off.
That would leave Dime at the mercy of a $1.8 billion unsolicited takeover bid by rival North Fork Bancorp. On Wednesday, after North Fork started soliciting Dime shareholders directly for their proxies, Dime issued a statement saying it was "deeply disappointed" and urging shareholders to reject North Fork's "misguided" takeover attempt.
New York-based Dime has hired Merrill Lynch & Co. as an additional advisor, a move that has some market watchers speculating that the company is looking for another merger partner. Credit Suisse First Boston has been advising Dime all along and will continue to be its lead banker.
Dime continues to push for a merger with Hudson United, saying its board considered and unanimously rejected North Fork's offer. The problem is, some Dime shareholders said they are no longer listening to Dime's guidance. Privately, some investors say they think Dime's management does not has enough votes to push through the merger with Hudson - even though executives including chairman Lawrence J. Toal scrambled last week to sell Dime's biggest shareholders on the deal.
Some investors said that even Mr. Toal may be giving up. These investors said he had cancelled meetings with them the last couple of days.
"Some of us wanted to know, 'Why not vote against it?' " said one portfolio manager for an institution that owns more than a million shares of Dime and who spoke on condition of anonymity. A spokesman for Dime said the company would not comment on the upcoming vote.
The Dime-North Fork-Hudson saga has grown increasingly hostile. Last week Dime sued North Fork, alleging that the Melville, N.Y., company was conspiring with FleetBoston Financial Corp. - which is injecting $250 million in North Fork to support the hostile bid - to choke off competition in New York and Connecticut. The suit appealed to Fleet's shareholders, telling them they could be in jeopardy.
Dime, it seems, is appealing to anyone who will listen.
"We also ask North Fork shareholders to ask what are the real intentions of their management, which we believe are simply to diminish competition and eliminate a strong competitor," Dime said in a statement Wednesday. "North Fork's shareholders, customers, and communities would feel the devastating effect of a hostile bust-up just as deeply."
Dime acknowledged that two years ago it held merger discussions with North Fork. "We mutually decided a combination did not make sense," the Dime statement said. "Nothing has changed."
But Dime has been an admirer of North Fork's in the past, at least according to an investor presentation in September when Dime announced it had reached an agreement to merge with Hudson United. The presentation showed how the new company, Dime United, would have a more diversified, bank-like business mix, and compared the pro forma financials of the combined company to those of a short list of bank-like peers: Associated Banc-Corp. in Green Bay, Wis., M&T Bank Corp. in Buffalo, N.Y., Summit Bancorp in Princeton, N.J. - and North Fork.
Materials filed more recently with the Securities and Exchange Commission contain an updated investor presentation. This time around, Dime compares the financial strength of Dime United against a bank-like peer group that includes only Associated, M&T, and Summit.
A source close to Dime management said it was "not appropriate" to include North Fork in the later materials.
- Dime Bancorp's performance (Source: Thomson Investors Network)
- North Fork Bancorp.'s performance (Source: Thomson Investors Network)
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