North Fork Bancorp, hoping to press its hostile bid for Dime Bancorp to a swift resolution, took the unusual step Wednesday of clearing the path for a competing bid by its ally, FleetBoston Financial Corp.
Melville, N.Y.-based North Fork has offered to cancel part of an agreement with Fleet that prevented the Boston-based bank from bidding for Dime. The agreement was part of a larger pact between the two companies in which Fleet would inject $250 million in support of North Fork's takeover of Dime in return for the chance to buy deposits and branches in New York from the combined company.
John Adam Kanas, North Fork's chairman and chief executive officer, said Wednesday during a conference call with investors and the media that Dime has appeared to use the noncompete part of that original agreement as a reason to drag its feet and ultimately avoid a sale of the company.
"You want this company sold," Mr. Kanas told Dime investors. "I won't let them use us as an excuse not to sell."
The lifting of the noncompete clause immediately adds Fleet to a list of possible bidders, though no banks other than North Fork have officially stepped forward with their own claim on Dime.
Mr. Kanas has said he would consider raising his bid for Dime, but his repeated attempts to meet with Dime's management to discuss his offer have failed, and he asserted that Dime management's intention all along has been to remain independent.
"It is time to stop hiding and take their collective heads out of the sand," Mr. Kanas said of Dime's management. "They think that no other company is going to be willing to spend the time and the money to wrestle the company away from them."
Mr. Kanas also said Dime's statement that it would not decide on its course until the completion of a strategic review "means Dime believed it can do whatever it feels like."
Thus, Wednesday's actions escalated the war of words that has been waged since North Fork began its takeover attempt in March.
Lawrence J. Toal, Dime's chairman and chief executive officer, said in March that the move was nothing more than a "1980s-style bust-up attempt." He also said North Fork's offer was inadequate and that its success was based on "unachievable assumptions." Within a day, Dime's board issued a statement rejecting the bid.
Charges and countercharges lobbed back and forth throughout the spring. Dime claimed the two companies had engaged in preliminary merger discussions two years ago but agreed to call them off. North Fork said that was "patently untrue."
"For several weeks we have observed Dime's behavior," Mr. Kanas said Wednesday. "We have been silent while Mr. Toal has discredited us. I hope Dime management is listening."
In a statement late Wednesday, a Dime spokesman said, "Nothing we have heard today from Mr. Kanas changes our view that North Fork's proposal would provide wholly inadequate financial returns to Dime shareholders, is unachievable, and rife with integration and execution risk.
"We are making good progress in our comprehensive review of strategic alternatives and will act in the best interest of shareholders," the spokesman added.
Mr. Kanas has acknowledged that Fleet was originally brought in by North Fork as an investor in part for defensive reasons. "It is clear that Fleet could have outbid us," he said in an interview in March.
That statement and several others led to a lawsuit by Dime, which claimed North Fork and Fleet were conspiring to choke off competition in the New York region. Dime also claimed that the two companies were attempting to buy branches and deposits at a price far lower than they would have offered had they competed against each other.
Mr. Kanas said he did not want Dime to be able to hold that accusation over his head anymore.
A Fleet statement on Wednesday's announcement was not available at press time.
Some observers said Fleet may not be inclined to bid for Dime because its agreement with North Fork - most of which is still in place - already puts it in a good spot. Fleet's investment would allow it to own 7% of a combined North Fork-Dime with options to buy additional shares. Fleet could also have the option to buy $2 billion of deposits and 17 branches from the combined company for $160 million.
But even if North Fork loses the bidding to its much bigger partner, it still wins. The arrangement with Fleet provides that Fleet pay North Fork $2.5 million and give it $500 million of deposits and four branches in Manhattan in that scenario.
A combined North Fork-Dime would have $36 billion of assets, $21 billion of deposits, and 268 branches.
A spokeswoman for Dime said late Tuesday that the company had rescheduled its annual shareholders meeting for June 29. Mr. Kanas urged Dime shareholders listening to the conference call to turn over their shares to North Fork and vote against Dime's proposed board members. Mr. Kanas said he had not decided whether he would submit his own slate for election at the meeting.