National City Corp. said it has terminated its offer to buy the shares it does not own of National Processing Inc., its transaction processing subsidiary.
The bank said fewer than half of the publicly traded outstanding shares had been tendered in response to its $9.50-a-share offer.
National City owns 87.6% of the company.
National Processing shares fell 13% on the news. "Most of the takeover froth in the stock was blown out," said Brock Vandervliet, an analyst with Keefe, Bruyette & Woods Inc.
The stock price later recovered, closing at $8.875, down 62.5 cents for the day. The shares rose because some investors figured out that an acquisition was not out of the question, Mr. Vandervliet said.
Under Ohio law, National City can buy shares on the open market and raise its stake in National Processing above 90% to force a merger, Mr. Vandervliet said.