New York Community Bancorp in Westbury had stiff competition as it angled to buy Astoria Financial in Lake Success, N.Y.
Astoria hired Sandler O'Neill last summer to solicit interest from possible acquirers, a recent filing tied to the New York Community deal disclosed. Around that time, Basswood Capital Management went public with an effort to push Astoria to explore a possible sale.
Four financial institutions, by late September, submitted nonbinding indications of interest that involved stock transactions. New York Community's proposal had the highest ceiling, valuing Astoria at up to $19 a share. One of the original suitors quickly backed off.
One of the other financial institutions, like New York Community, was big enough that it had started making plans for crossing $50 billion in assets and becoming a systemically important financial institution, the filing said. That institution, which "expressed reservations about proceeding with any potential transaction in the near term, instead preferring to pursue a transaction at the end of 2015," eventually dropped out of the bidding process.
That left New York Community and another, unnamed institution to compete for Astoria.
In late October, Astoria's board met with Joseph Ficalora, New York Community's chief executive, and executives at the other institution. The filing notes that Astoria's board was worried that Ficalora's plans to reposition New York Community's balance sheet, raise $600 million in capital and reduce the dividend would hurt his company's stock.
Astoria's management believed, however, that merging with the other institution had more execution risk and that the other suitor "could face obstacles in achieving synergies due to the higher relative cost of integration." New York Community "generally seemed in a better position to promptly execute and complete a transaction," and "its rapid and efficient work in the process provided evidence of this preparedness," the filing said.
Each financial institution was pushed to increase their offers. New York Community added a cash component, increasing the total value by about 3%, to nearly $2 billion, or $19.29 a share. The other institution increased the fixed exchange ratio to raise its offer to $1.98 billion, or $19.24 a share.
Ralph Palleschi, Astoria's chairman, solicited comments from the company's outside directors on their view of the proposals. "The outside directors unanimously concluded that … NYCB's proposal had a higher certainty of completion and therefore was in the best interests of Astoria common stockholders," the filing said.
The merger with New York Community was announced on Oct. 29.