Six months after launching a $1.9 billion hostile takeover, North Fork Bancorp chairman John Adam Kanas is beginning to sound like he doesn't want Dime Bancorp after all.
In fact, the feisty Mr. Kanas, who has gained a reputation in three decades of banking as a ruthless acquirer, seems to be questioning everything these days. Having built $30 billion-asset North Fork through a series of buyouts in the last 10 years and honed a talent for post-merger cost-cutting, Mr. Kanas said he is beginning to think that bank and thrift acquisitions are no longer the best way to grow.
"It's time for us to make some meaningful decisions," he said. "We have to make the best use of our capital, and the question is, 'Are there easier ways to make money?'
"We've been sitting around for the last two months thinking about life in general. It's been a real catharsis."
At stake is the offer Mr. Kanas made in March to buy New York-based Dime. That bid succeeded in blocking Dime's merger with Hudson United Bancorp of Mahwah, N.J. Dime has since won the backing of Warburg Pincus Equity Partners; the New York investment firm agreed in July to inject $238 million to assist Dime's plan to buy its shares back from investors.
For most of the summer North Fork and Dime engaged in an acrimonious battle through press statements and meetings with big institutional shareholders. North Fork, of Melville, N.Y., even hatched a plan to nominate its own slate of candidates to the Dime board, an act that Dime characterized as "grandstanding."
Executives from the companies have yet to meet to discuss the North Fork offer. Dime has repeatedly rejected it as "inadequate."
While Mr. Kanas declined to say whether he would continue to press his takeover, his choices are clear: pursue a tender offer for Dime shares or drop it. The tender offer, which has been extended several times, is scheduled to expire this month.
Mr. Kanas contends that the tender offer and uncertainty surrounding the ongoing fight with Dime are depressing his company's stock price by $3 to $4 a share. North Fork has been trading around $16 a share recently. Dime's has risen to just over $20, its highest price since July 1999.
Investors have become increasingly vocal - and disgusted - by the whole affair. Whether Mr. Kanas pursues the tender offer or not "won't make any difference," said Jeffrey Gendell, a portfolio manager whose fund owns more than a million shares of Dime. "This has been a stupid chapter in history."
At a conference Monday sponsored by Friedman Billings Ramsey, Dime chief executive officer Lawrence J. Toal had to endure the ire of shareholders questioning the share buyback plan. Dime aims to buy 13.6 million shares in a Dutch auction that would pay in a range of $16 to $18.
But the auction, which began in August, has already been extended once. So far Dime has gotten just 275,000 shares tendered. Mr. Toal said at the conference that Dime may pursue open-market share buybacks if the Dutch auction fails to meet its goals.
So far, Dime's stock price is above the auction's range. "This is a high-quality position to be in," Mr. Toal said. "The tender offer is already serving its purpose."
In an interview Tuesday, Mr. Toal said his company is making progress toward better efficiency. Asked what he would do if Mr. Kanas dropped the bid, he said: "We're focusing on the business strategy. I don't intend to be distracted."
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