In the end, New York Bancorp decided it had more to lose than to gain by not budging.
Late last Friday the New York thrift agreed to what amounted to a $5 million increase in the price to complete its acquisition of Hamilton Bancorp.
"It was something of a cliff-hanger," said Thomas F. Theurkauf, vice president of Keefe, Bruyette & Woods Inc. "New York was put in a position of having to fill the deal or kill the deal. And they did decide to fill the deal."
Noting a decline in the price of New York Bancorp shares, Hamilton threatened to cancel the deal unless New York Bancorp agreed to increase the original offer of 1.6 shares of its stock for every Hamilton share.
When the deadline for a decision arrived, Hamilton's strategy paid off, as New York Bancorp agreed to increase the ratio to 1.705 - or a price of about $126 million.
New York Bancorp shares fell sharply on the news, tktkt to tktk, a tkt% drop.
"Through identified operating efficiencies, expanded market penetration, and an enhanced capital position, the transaction should provide our shareholders with . . . financial rewards," said Michael A. McManus, president and CEO of New York Bancorp.
"The market will trash it for a little while, but it is a good expansion move for New York Bancorp," said Christopher Quackenbush, a principal with Sandler O'Neill LP, which advised New York Bancorp.
Thrift stocks have declined dramatically since the two New York companies agreed to merge last year - a point some critics raised in questioning Hamilton for holding out.
A number of deals fell through because of declining share prices, among them Summit Bancorp's deal for Bankers Corp. and Meridian Bancorp's purchase of United Counties Bancorp.
But Hamilton could get the ratio increase because New York Bancorp's stock had fallen below the $19.69 "collar" price.
The final deal pays Hamilton shareholders $31.50 for each share. Shares closed last Friday at $27.375.
Some speculated that Hamilton could afford the brinkmanship because other suitors had previously expressed an interest in the thrift.
Hamilton's adviser, McConnell Budd & Downes Inc., would not comment.
Jonathan D. Epstein contributed to this article.