key obstacle to hostile takeover bids was not a response to any unwelcome overtures. The $3 billion-asset company, based in Itasca, this month said its board of directors lowered the threshold on the shareholders' rights plan to 10% from 15%. The move should help deter unwelcome would-be acquirers from gaining control of the company without an agreement with its board. Under the plan, if an unwelcome investor acquires or expresses intent to acquire shares beyond the threshold amount, shareholders can exercise rights to purchase shares of preferred stock that, in effect, dilute the value of the company's common stock. Such a plan does not affect mergers that the board agrees to. Robert P. O'Meara, First Midwest's president and chief executive, said in a prepared statement that the reduction of the threshold was part of a regular review process and was "not made in response to any takeover or related overture." No investors have more than 5% of the company's stock, said James M. Roolf, senior vice president. However, First Midwest is one of the largest independent commercial banks in Illinois and an attractive takeover candidate for companies already in or seeking to be in the Chicago market, said John E. Snow, an analyst with Rodman & Renshaw, Chicago. He said that a 10% threshold is common in rights plans, and that he's not surprised to see the board focus on consolidation-related issues this year. "If their directors hadn't been thinking M&A, I'd say the activity we've seen in the last six months would get them to think about it," Mr. Snow said. "There is increased hostile activity with the Wells Fargo transaction," agreed analyst Joseph A. Stieven of Stifel, Nicolaus & Co., St. Louis. "Maybe that has people thinking." But Mr. Stieven said he doesn't pay much attention to rights plans because investors need Federal Reserve approval to own more than 10% of a bank's stock anyway and because many companies have such plans. First Midwest, which has about 17% insider ownership, likely is just keeping up with trends in the plans, he said. The company implemented its plan in 1989 and it expires in 2005. First Midwest also increased the exercise price for each right to $100 from $75.
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