SAN FRANCISCO - After at least four previous rejections, Westamerica Bancorp. has finally struck a deal to acquire Napa Valley Bancorp.
The transaction, a stock swap valued at about $57 million, will create the largest independent bank in Northern California.
Westamerica, based in San Rafael, will end up with a total of $2 billion in assets as well as 58 branches in I I counties, mainly in the affluent suburbs north of San Francisco.
David L. Payne, chairman of Westamerica, said he was "tickled pink" by the agreement, which was announced Tuesday.
|It's been quite an odyssey," he said in an interview. "I don't know how many contacts we've had over the last two years. I just have never given up on this."
The courtship occasionally took on a circus atmosphere. Since 1990, Napa Valley, based in Napa, has gone through a proxy contest, widely publicized boardroom fights, and a shareholder meeting that erupted into an angry shouting match about why directors refused to sell out to Westamerica, which has $1.36 billion in assets.
One offer, made nearly two years ago, was valued at up to $65 million.
Earlier this year, Napa Valley, which has $607 million in assets, spurned a renewed offer from Mr. Payne valued at about $52 million. But afterward, the company's long-time chairman, William P. Brooks, stepped down and a new management team was installed.
Former Chairman's Role
"Obviously, the old chairman was blocking the deal," said Philip L. Hage, an analyst with Van Kasper & Co., San Francisco.
Bryan C. Hansen, Napa Valley's chairman and chief executive, acknowledged that board members have disagreed about whether to accept Westamerica's offers. But he said it would be "improper to link Mr. Brooks and his resignation with this deal."
Mr. Hansen said Napa Valley accepted the revised Westamerica bid because the price was higher than that offered earlier this year. In addition, he noted, Westamerica agreed to preserve two of Napa Valley's banking subsidiaries as separate operating units.
Under the definitive merger agreement, Westamerica will pay about $16.48 for each share of Napa Valley, based on Westamerica's current stock price. The cost is about 1.6 times Napa Valley's book value.
Rationale for Pricing
The new company will keep the Westamerica name. Mr. Payne will remain as chairman, president, and chief executive. Bryan C. Hansen, his Napa Valley counterpart, will hold a senior strategic planning position with a title still to be decided.
The deal's price tag below bids in 1990 and 1991 reflects Napa Valley's financial troubles. In recent quarters, the company, which has four bank subsidiaries, has suffered from weak earnings, rising loan problems, and tough regulatory scrutiny.
At the end of the second quarter, problem loans plus foreclosed property totaled $39.6 million, or 8.7% of total loans plus foreclosed property.
The merged company will have three bank subsidiaries, including Napa Valley's flagship Napa bank unit. In a move not linked to the merger, Napa Valley plans to spin off its $46 million-asset Sonoma County subsidiary if the unit's directors can get financing.
Napa Valley agreed to Westamerica's demand for control over the board of the combined company. Westamerica has agreed to add to its board two directors from among Napa Valley's current directors or the boards of Napa Valley's bank subsidiaries.