City National Corp. has adopted a stockholder rights plan that would to make it much more expensive for rivals to make a hostile takeover.
The plan provides one right for each common share held. If an investor accumulates 10% of outstanding shares, each right could be exercised to purchase common shares worth double the exercise price, or $90 initially.
Rights, to be distributed to people holding shares on March 13, expire in 10 years. "The plan isn't intended to discourage or encourage an offer for the company and hasn't been adopted in response to any acquisition proposals," said Russell Goldsmith, chief executive of City National.
City National, a commercial bank with $4.7 billion of assets and 33 banks in Southern California, is seen as an attractive takeover target because of its base in the upscale Los Angeles suburb of Beverly Hills.
Southern California has emerged as a merger hotbed, as evidenced by H.F. Ahmanson & Co.'s $6 billion hostile takeover bid for Great Western Financial Corp., both based near Los Angeles.
In December, Seattle-based Washington Mutual Inc. acquired American Savings Bank of Irvine for about $1.65 billion.
The Goldsmith family is City National's largest shareholder, with 6.94 million shares or 15% of outstanding shares, according to the bank's most recent proxy filing.