Charter One Financial Corp. Tuesday withdrew its counteroffer to buy Standard Federal Bancorp., removing a potential obstacle to Standard Federal's merger pact with ABN Amro North America.
In a letter sent Friday, Charter One's chairman, Charles John Koch, had urged Standard Federal board members to reconsider the $1.9 billion contract with ABN Amro, the big Dutch-owned bank that is building its presence in the Midwest.
Mr. Koch offered 1.39 shares of Charter One's stock for each Standard Federal share, up from his previous bid of 1.33 shares. On Monday, Charter One's offer was $60.47 in stock versus ABN Amro's $59 cash price.
But early Tuesday, shortly before the board met at Standard Federal's Troy, Mich., headquarters to consider the letter, Charter One withdrew the offer.
The Cleveland thrift said its review of Standard Federal's agreement with ABN Amro had "determined it was economically unfeasible to pursue further merger discussions with Standard Federal." That agreement would have required counterbidders, such as Charter One, to make a hefty payment to ABN Amro if they prevailed.
Mr. Koch also said the counteroffer was made before Charter One knew a definitive agreement was signed. Charter One thought that the two partners had only signed a letter of intent, he said.
Thomas R. Ricketts, chairman of Standard Federal, said Tuesday that the board had deliberated last week on Charter One's offer of 1.33 shares, made in response to Standard Federal's request for final bids by Nov. 6.
At the time, the offer was worth $57.70, clearly less than ABN Amro's bid, Mr. Ricketts said.
Moreover, the board was unwilling to gamble that Charter One's stock price would hold up until the deal closed in 1997, Mr. Ricketts said. "Stocks change everyday," and Charter One did not offer a guaranteed floor price, he said.
In an earlier interview, Mr. Ricketts said concern about a possible downturn in the stock market made ABN Amro's cash deal appealing. "We're in a very heady period lately with a very strong economy (and) a very strong stock market," he said.
"One thing the board certainly had in mind is what would happen if the market went down, and our stock went with it. Wouldn't the shareholders have the right to think we didn't do our fiduciary job turning down $59 cash and waking up to find out the stock is $49 or something?"
Bloomberg Business News contributed to this article.