Sterling Bancshares Inc. in Houston is said to be shopping itself as it prepares for a hostile board takeover proposed by Don Adam, its biggest shareholder.
Several investment bankers confirmed reports that the $5 billion-asset company had hired Morgan Stanley to advise it on a potential sale. The investment bank also handled Sterling's $87 million capital raise in March.
"It is widely known" that Sterling is looking at "strategic alternatives," said Jim Gardner, chairman of the investment bank Commerce Street Capital in Texas. "Obviously, it is to take down Adam, who poses a serious threat."
Sterling could entertain a buyout before Adam proceeds with a proxy fight through TAC Capital LLC by nominating new directors for this year's annual meeting.
TAC has increased its stake in Sterling over four years. It owned 9.99% of Sterling's common stock at Nov. 1. In November, Adam sent a letter to Sterling's shareholders nominating five individuals, including himself, for the board. He openly questioned in the bank's management and performance.
In a December interview Adam said he was disappointed in management's handling of shared national credits in Florida. Adam is also the chief executive of a community bank in Tampa, Fla., that was recently capitalized to search for bank acquisitions.
"I do believe we would have better knowledge as to how to dispose the assets or properly manage them," Adam said in December. "All of my other endeavors are doing well and I expect them to do well."
Sterling did not return a call seeking comment. Adam, through a spokesman, declined to comment on the Sterling speculation.
Gardner said Sterling still has a good franchise in Houston that could attract several banks interested in expanding in Texas. Analysts also said that soliciting bids could show Adam how others value the company.