A Pittsburgh banking company deep-sixed the proposed merger of a suburban Lincoln Savings Bank with City Holding Corp., Charleston, W. Va.
Integra Financial Corp., which holds about 5% of Lincoln Savings' stock, told Lincoln officers that it would oppose a "pooling-of-interests" transaction that had been in the works since last fall.
Integra said it believed City Holding Corp.'s stock price would not hold up over the long haul, according to Allen Turske, president of the $250 million-asset Lincoln Savings.
Lincoln, based in Carnegie, Pa., and City Holdings announced late last week that the deal had been terminated because of opposition by "a significant shareholder." The shareholder was later identified as Integra.
With opposition from Integra, the parties indicated, the deal could not proceed as a pooling of interest - a noncash deal based on the exchange of stock. Other forms of mergers would be impractical, they said.
Mr. Turske said that Integra's opposition followed earlier support for the deal and came as a complete surprise. Integra took the position just as proxies were being readied to mail.
Integra told the bank that it had friends with another 5% who also would oppose the deal, Mr. Turske said.
Furthermore, Integra suggested to Lincoln officers that it could persuade PNC Bank, which owns less than 5% of Lincoln stock, to join in exercising dissenter's rights.
Matter Is Called Moot
An Integra spokesman said the company would not comment on the matter. A spokesman for Pittsburgh-based PNC said his company never came to a decision on its position but that the matter is now moot.
Mr. Turske, meanwhile, is clearly disappointed about the deal's demise.
"It was something that would have been great for our shareholders and for our communities," Mr. Turske said.
No other shareholders had voiced opposition to the deal, which would have given 2.25 shares of City Holding for every share of Lincoln stock, Mr. Turske said. And, unlike some mergers, no staff reorganization of cutbacks would have been necessary, he said.
Other Deals Fell Apart
Though Lincoln has been anxious to consummate a merger agreement, it has been unsuccessful repeatedly. In the last few years, proposed mergers with Allegheny Valley Bank and Northside Bank, both in Western Pennsylvania, fell apart during negotiations.
The $653 million-asset City Holding, which is the parent of eight banks, had pursued the merger because it views Lincoln as a well-managed bank in a growing market, said Stephen J. Day, president of the West Virginia concern.
"We own a mortgage banking operation in Carnegie and we felt that a depository institution was very complimentary," Mr. Day said. "It was strategically workable."
The reasoning for the late-hour opposition is still not clear to him, Mr. Day said. But, he said, City Holding Co. will continue to look for other partners.