Worried about a hostile takeover, that once-rare acquisition strategy that's in vogue now that Wells Fargo & Co. is trying to takeover First Interstate Bancorp?

Banking lawyers said institutions can take several steps to ward off these uninvited advances.

"Nothing is an absolute killer," said Mike Greenspan, a partner at Thompson & Mitchell. "But you can make it very difficult for people trying to take you over."

The first barrier: strong economic performance.

"The most important thing is to have a performance record and a market recognition of that record so no one can afford to buy you," said one lawyer active in merger work. "That is absolutely the first line of defense."

Bankers also should recruit a board of directors firmly committed to independence. "You can have all the corporate defenses you want in the world, but if the board decides not to continue with independence, those defenses are irrelevant," the lawyer said.

Bankers with committed boards and strong earnings should look to corporate defenses as a third layer of defense.

Mr. Greenspan said golden parachutes are the most common. These devices force the bank to shell out up to 2.99 times a senior executive's salary if the acquirer fires him. This makes it very expensive for the acquirer to install its own people, usually a given in any deal.

Banks also can adopt staggered terms for their boards of directors. This makes it harder for a hostile bidder to install a board that wants to sell, Mr. Greenspan said.

Banks also can use blank-check preferred stock, a type of security that allows the board to define its terms. This allows the board to issue types of stock most likely to derail the merger.

One common tactic is to issue a type of stock that prevents the acquirer from merging its books with the target bank's. Instead, it must reevaluate all of the assets on the books, a process that could significantly reduce the new bank's capital.

The stock does have a drawback. The shareholders must delegate their authority to the board, something they may be unwilling to do.

But the defenses don't end there. Poison pills are fashionable in other industries, Mr. Greenspan said. These deals permit shareholders to buy company stock at half-price during hostile takeovers. That balloons the amount of stock in circulation, significantly increasing the total the acquirer must dish out.

Bankers also can include special clauses in property leases to drive up the price of a deal. These clauses provide for significant lump-sum payments if the bank must close the facility.

Finally, a bank can employ the "crown jewel defense," in which it agrees in advance to sell a key asset at below market rates if the institution is taken over.

"They aren't going to take you over if it is that crown jewel that they want," Mr. Greenspan said.

These defenses are not insurmountable. Acquirers can sue the bank's management if the takeover protections are not in the shareholders' best interests.

Bank management must be able to point to a detailed business plan that outlines how independence benefits stockholders, Mr. Greenspan said.

Bankers and their boards also shouldn't reject a deal outright. "Take the time and analyze the offer and consult with the business plan," he said. "Only then make a reasoned decision to reject the offer."

First Interstate appears destined to lose its independence - either it will succumb to Wells Fargo or it will sell to a friendly suitor.

Legal experts said the battle has ignited fears among some bankers that they could be next. "They have reacted by saying everyone is at risk," Mr. Greenspan said. "They are saying if they will make a takeover for a $90 billion bank, they'll easily go after a $35 billion bank."

But it's unclear whether the Wells bid will open the banking industry up to more hostile mergers. The industry's other celebrated hostile takeover - Bank of New York's acquisition of Irving Trust in 1988 - was followed by nothing but friendly mergers.

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