Persistent Suitor Sweetens Its Buyout Offer And Gets the Cold Shoulder

A North Carolina banking company wooing a neighboring bank has been rejected a second time.

Carolina First Bancshares, Lincolnton, raised its initial acquisition offer by almost $20 million. But officers and directors of $286 million- asset Peoples Bank, Newton, sent a letter to shareholders last week to inform them of the new offer and explain why they had turned it down.

"It is critical, if we do elect to give up our independence, that we pick the right time and the right partner," the letter said. "Again, we believe now is not the right time."

Carolina First might try again, but its president, James E. Burt 3d, said there are no immediate plans to do so.

Mr. Burt, whose $500 million-asset company is not related to Carolina First Corp. of Greenville, S.C., said he was disappointed but not surprised by the rejection.

"We felt like we offered a very strong price" he said. "We felt that was a price that should have been acceptable."

Price was not the issue, Peoples said, but the two parties differed on what Carolina First's last offer was really worth.

The June offer had been stock then worth about $52.8 million. Last month Carolina First offered stock it said was worth about $42 per Peoples share, or about $71 million in all.

That, Mr. Burt said, was more than three times book. But Peoples, in the Aug. 28 letter to shareholders, said it worked out to only $38.25, or 2.74 times book.

Mr. Burt said he did not understand how Peoples came up with the lower price. Tony W. Wolfe, Peoples' president and chief executive officer, said its professional advisers calculated the price; he declined to discuss how it was derived.

In any case, Mr. Wolfe emphasized that the 85-year-old bank intends to stay independent, and he noted that it is growing on its own. The bank will open its 10th branch in October and another in January.

Asked whether he thought Carolina First would try a hostile takeover, Mr. Wolfe said, "I hope not."

Hostile bids remain rare in community banking, but Carolina First, though it did not seek a shareholder vote, did send a letter to shareholders after its first offer asking them consider sale.

Ronald Poe, a bank analyst at Interstate Johnson Lane in Newton, N.C., said he expects Carolina First to try again.

'But I think it's a lost cause," he said.

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