private merger entreaties by New Jersey's acquisitive Hubco Inc., just one month after agreeing to buy eight branches from San Francisco-based First Nationwide Bank. MSB Bancorp's gruff refusal is the first public rebuff that the Mahwah, N.J.-based Hubco has faced since it started a spurt of 11 acquisitions in New Jersey five years ago. Hubco's purchase of Growth Financial Corp. is still pending. "I'm not surprised that they made the offer," said Chris Bamman, junior bank analyst with Grunthal & Co. in New York. "It's part of their strategy to acquire other companies and break into the New York market." Officials of $461 million-asset MSB Bancorp, Goshen, N.Y., decided to reveal $1.6 billion-asset Hubco's efforts to purchase the company after they apparently failed in repeated attempts to convey their desire to remain independent, according to a statement released by the company. Hubco president and chief executive Kenneth T. Neilson declined to comment. MSB officials did not return phone calls. According to the MSB release, Hubco, a shareholder of MSB, sent it an unsolicited proposal on July 20, without suggesting details of a transaction. At the time, according to the statement, MSB officials were reviewing financial data regarding the First Nationwide branches and chose to ignore Hubco's letter, although the board of directors was notified. During negotiations between MSB and First Nationwide, Hubco sent a second letter, offering $35 per share for MSB, which is 1.4 times book value. After some deliberations, MSB declined the offer in an early October telephone call and announced its deal to buy the upstate New York branches of First Nationwide, located in four counties, with about $493 million in deposits. MSB is paying an 8% deposit premium, or about $39 million, for the branches. The transaction is expected to close in the first quarter. The company plans to raise about $37 million in a stock offering to pay for the branch purchase, which analysts have sharply criticized as highly dilutive to book value. Hubco tried again at the end of October, this time lowering its offer to $25 per share and making it conditional on MSB's canceling its stock offering. Again, MSB directors rejected the offer in a phone call to Hubco, having decided that "the acquisition of the First Nationwide branches ... constituted a reasonable alternative for building shareholder value within a reasonable period of time." "I'm amazed," said Kevin Timmons, bank analyst for First Albany Corp. in Albany, N.Y. "A $35 offer for that company would appear to be a pretty good price. To turn that down and then take an action that would severely dilute the value of their shareholders - it's hard to see what justification they would have to do that." This is the second time that Hubco, with a franchise that spans northern New Jersey, has failed in an effort to enter New York State, whose border is just one mile from its Mahwah headquarters. An agreement to buy Savings Bank of Rockland in 1990 was terminated by mutual agreement.
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